Correlation Between Thunderstruck Resources and Globex Mining

Can any of the company-specific risk be diversified away by investing in both Thunderstruck Resources and Globex Mining at the same time? Although using a correlation coefficient on its own may not help to predict future stock returns, this module helps to understand the diversifiable risk of combining Thunderstruck Resources and Globex Mining into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Thunderstruck Resources and Globex Mining Enterprises, you can compare the effects of market volatilities on Thunderstruck Resources and Globex Mining and check how they will diversify away market risk if combined in the same portfolio for a given time horizon. You can also utilize pair trading strategies of matching a long position in Thunderstruck Resources with a short position of Globex Mining. Check out your portfolio center. Please also check ongoing floating volatility patterns of Thunderstruck Resources and Globex Mining.

Diversification Opportunities for Thunderstruck Resources and Globex Mining

-0.04

Correlation Coefficient

Thunderstruck Resources  Globex Mining

Good diversification

The 3 months correlation between Thunderstruck and Globex is -0.04. Overlapping area represents the amount of risk that can be diversified away by holding Thunderstruck Resources and Globex Mining Enterprises in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Globex Mining Enterprises and Thunderstruck Resources is a relative statistical measure of the degree to which these equity instruments tend to move together. The correlation coefficient measures the extent to which returns on Thunderstruck Resources are associated (or correlated) with Globex Mining. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Globex Mining Enterprises has no effect on the direction of Thunderstruck Resources i.e., Thunderstruck Resources and Globex Mining go up and down completely randomly.

Pair Corralation between Thunderstruck Resources and Globex Mining

Assuming the 90 days horizon Thunderstruck Resources is expected to under-perform the Globex Mining. But the pink sheet apears to be less risky and, when comparing its historical volatility, Thunderstruck Resources is 1.15 times less risky than Globex Mining. The pink sheet trades about -0.02 of its potential returns per unit of risk. The Globex Mining Enterprises is currently generating about 0.15 of returns per unit of risk over similar time horizon. If you would invest  77.00  in Globex Mining Enterprises on December 3, 2024 and sell it today you would earn a total of  25.00  from holding Globex Mining Enterprises or generate 32.47% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	95.31%
Values	Daily Returns

Thunderstruck Resources  vs.  Globex Mining Enterprises

Thunderstruck Resources

Risk-Adjusted Performance

Very Weak

Over the last 90 days Thunderstruck Resources has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable basic indicators, Thunderstruck Resources is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

Globex Mining Enterprises

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Globex Mining Enterprises are ranked lower than 12 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, Globex Mining reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Thunderstruck Resources and Globex Mining

The main advantage of trading using opposite Thunderstruck Resources and Globex Mining positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Thunderstruck Resources position performs unexpectedly, Globex Mining can make up some of the losses. Pair trading also minimizes risk from directional movements in the market. For example, if an entire industry or sector drops because of unexpected headlines, the short position in Globex Mining will offset losses from the drop in Globex Mining's long position.

The idea behind Thunderstruck Resources and Globex Mining Enterprises pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.

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Note that this page's information should be used as a complementary analysis to find the right mix of equity instruments to add to your existing portfolios or create a brand new portfolio. You can also try the Equity Forecasting module to use basic forecasting models to generate price predictions and determine price momentum.