Correlation Between Thor Explorations and Mako Mining

Can any of the company-specific risk be diversified away by investing in both Thor Explorations and Mako 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 Thor Explorations and Mako Mining into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Thor Explorations and Mako Mining Corp, you can compare the effects of market volatilities on Thor Explorations and Mako 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 Thor Explorations with a short position of Mako Mining. Check out your portfolio center. Please also check ongoing floating volatility patterns of Thor Explorations and Mako Mining.

Diversification Opportunities for Thor Explorations and Mako Mining

0.72

Correlation Coefficient

Thor Explorations  Mako Mining

Poor diversification

The 3 months correlation between Thor and Mako is 0.72. Overlapping area represents the amount of risk that can be diversified away by holding Thor Explorations and Mako Mining Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Mako Mining Corp and Thor Explorations 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 Thor Explorations are associated (or correlated) with Mako Mining. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Mako Mining Corp has no effect on the direction of Thor Explorations i.e., Thor Explorations and Mako Mining go up and down completely randomly.

Pair Corralation between Thor Explorations and Mako Mining

Assuming the 90 days horizon Thor Explorations is expected to generate 1.49 times more return on investment than Mako Mining. However, Thor Explorations is 1.49 times more volatile than Mako Mining Corp. It trades about 0.12 of its potential returns per unit of risk. Mako Mining Corp is currently generating about 0.14 per unit of risk. If you would invest  36.00  in Thor Explorations on November 28, 2024 and sell it today you would earn a total of  3.00  from holding Thor Explorations or generate 8.33% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	95.45%
Values	Daily Returns

Thor Explorations  vs.  Mako Mining Corp

Thor Explorations

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Thor Explorations are ranked lower than 12 (%) of all global equities and portfolios over the last 90 days. In spite of fairly abnormal basic indicators, Thor Explorations showed solid returns over the last few months and may actually be approaching a breakup point.

Mako Mining Corp

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Mako Mining Corp are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. In spite of fairly abnormal basic indicators, Mako Mining showed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Thor Explorations and Mako Mining

The main advantage of trading using opposite Thor Explorations and Mako Mining positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Thor Explorations position performs unexpectedly, Mako 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 Mako Mining will offset losses from the drop in Mako Mining's long position.

The idea behind Thor Explorations and Mako Mining Corp 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.

Check out your portfolio center.

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 Performance Analysis module to check effects of mean-variance optimization against your current asset allocation.