Correlation Between THORNEY TECHS and Nucor

Can any of the company-specific risk be diversified away by investing in both THORNEY TECHS and Nucor 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 Nucor 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 Nucor, you can compare the effects of market volatilities on THORNEY TECHS and Nucor 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 Nucor. Check out your portfolio center. Please also check ongoing floating volatility patterns of THORNEY TECHS and Nucor.

Diversification Opportunities for THORNEY TECHS and Nucor

0.51

Correlation Coefficient

THORNEY TECHS  Nucor

Very weak diversification

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

Pair Corralation between THORNEY TECHS and Nucor

Assuming the 90 days horizon THORNEY TECHS LTD is expected to generate 1.22 times more return on investment than Nucor. However, THORNEY TECHS is 1.22 times more volatile than Nucor. It trades about -0.02 of its potential returns per unit of risk. Nucor is currently generating about -0.08 per unit of risk. If you would invest  7.80  in THORNEY TECHS LTD on October 4, 2024 and sell it today you would lose (0.80) from holding THORNEY TECHS LTD or give up 10.26% of portfolio value over 90 days.

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

THORNEY TECHS LTD  vs.  Nucor

THORNEY TECHS LTD

Risk-Adjusted Performance

0 of 100

Very Weak

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

Nucor

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Nucor has generated negative risk-adjusted returns adding no value to investors with long positions. Despite fragile performance in the last few months, the Stock's basic indicators remain nearly stable which may send shares a bit higher in February 2025. The current disturbance may also be a sign of long-run up-swing for the company stockholders.

Pair Trading with THORNEY TECHS and Nucor

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

The idea behind THORNEY TECHS LTD and Nucor 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 Options Analysis module to analyze and evaluate options and option chains as a potential hedge for your portfolios.