Correlation Between THORNEY TECHS and H World

Can any of the company-specific risk be diversified away by investing in both THORNEY TECHS and H World 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 THORNEY TECHS and H World into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between THORNEY TECHS LTD and H World Group, you can compare the effects of market volatilities on THORNEY TECHS and H World 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 THORNEY TECHS with a short position of H World. Check out your portfolio center. Please also check ongoing floating volatility patterns of THORNEY TECHS and H World.

Diversification Opportunities for THORNEY TECHS and H World

0.41

Correlation Coefficient

THORNEY TECHS  H World

Very weak diversification

The 3 months correlation between THORNEY and CL4A is 0.41. Overlapping area represents the amount of risk that can be diversified away by holding THORNEY TECHS LTD and H World Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on H World Group and THORNEY TECHS 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 THORNEY TECHS LTD are associated (or correlated) with H World. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of H World Group has no effect on the direction of THORNEY TECHS i.e., THORNEY TECHS and H World go up and down completely randomly.

Pair Corralation between THORNEY TECHS and H World

Assuming the 90 days horizon THORNEY TECHS LTD is expected to generate 2.2 times more return on investment than H World. However, THORNEY TECHS is 2.2 times more volatile than H World Group. It trades about 0.03 of its potential returns per unit of risk. H World Group is currently generating about 0.03 per unit of risk. If you would invest  7.60  in THORNEY TECHS LTD on October 8, 2024 and sell it today you would earn a total of  0.00  from holding THORNEY TECHS LTD or generate 0.0% return on investment over 90 days.

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

THORNEY TECHS LTD  vs.  H World Group

THORNEY TECHS LTD

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in THORNEY TECHS LTD are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, THORNEY TECHS may actually be approaching a critical reversion point that can send shares even higher in February 2025.

H World Group

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days H World Group has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest fragile performance, the Stock's basic indicators remain stable and the current disturbance on Wall Street may also be a sign of long-run gains for the company stockholders.

Pair Trading with THORNEY TECHS and H World

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

The idea behind THORNEY TECHS LTD and H World Group 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 Pattern Recognition module to use different Pattern Recognition models to time the market across multiple global exchanges.