Correlation Between Truscott Mining and New Hope

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

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

Diversification Opportunities for Truscott Mining and New Hope

0.51

Correlation Coefficient

Truscott Mining  New Hope

Very weak diversification

The 3 months correlation between Truscott and New is 0.51. Overlapping area represents the amount of risk that can be diversified away by holding Truscott Mining Corp and New Hope in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on New Hope and Truscott Mining 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 Truscott Mining Corp are associated (or correlated) with New Hope. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of New Hope has no effect on the direction of Truscott Mining i.e., Truscott Mining and New Hope go up and down completely randomly.

Pair Corralation between Truscott Mining and New Hope

Assuming the 90 days trading horizon Truscott Mining Corp is expected to generate 1.8 times more return on investment than New Hope. However, Truscott Mining is 1.8 times more volatile than New Hope. It trades about 0.06 of its potential returns per unit of risk. New Hope is currently generating about 0.01 per unit of risk. If you would invest  5.40  in Truscott Mining Corp on October 21, 2024 and sell it today you would earn a total of  2.50  from holding Truscott Mining Corp or generate 46.3% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	100.0%
Values	Daily Returns

Truscott Mining Corp  vs.  New Hope

Truscott Mining Corp

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Truscott Mining Corp are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively stable primary indicators, Truscott Mining is not utilizing all of its potentials. The newest stock price uproar, may contribute to short-horizon losses for the private investors.

New Hope

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days New Hope has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable fundamental indicators, New Hope is not utilizing all of its potentials. The current stock price uproar, may contribute to short-horizon losses for the private investors.

Pair Trading with Truscott Mining and New Hope

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

The idea behind Truscott Mining Corp and New Hope 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 Portfolio Rebalancing module to analyze risk-adjusted returns against different time horizons to find asset-allocation targets.