Correlation Between Wallbridge Mining and Themac Resources

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

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

Diversification Opportunities for Wallbridge Mining and Themac Resources

0.09

Correlation Coefficient

Wallbridge Mining  Themac Resources

Significant diversification

The 3 months correlation between Wallbridge and Themac is 0.09. Overlapping area represents the amount of risk that can be diversified away by holding Wallbridge Mining and Themac Resources Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Themac Resources and Wallbridge 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 Wallbridge Mining are associated (or correlated) with Themac Resources. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Themac Resources has no effect on the direction of Wallbridge Mining i.e., Wallbridge Mining and Themac Resources go up and down completely randomly.

Pair Corralation between Wallbridge Mining and Themac Resources

Assuming the 90 days horizon Wallbridge Mining is expected to generate 0.56 times more return on investment than Themac Resources. However, Wallbridge Mining is 1.79 times less risky than Themac Resources. It trades about -0.15 of its potential returns per unit of risk. Themac Resources Group is currently generating about -0.22 per unit of risk. If you would invest  5.00  in Wallbridge Mining on September 13, 2024 and sell it today you would lose (0.78) from holding Wallbridge Mining or give up 15.6% of portfolio value over 90 days.

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

Wallbridge Mining  vs.  Themac Resources Group

Wallbridge Mining

Risk-Adjusted Performance

0 of 100

Very Weak

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

Themac Resources

Risk-Adjusted Performance

5 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Themac Resources Group are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. Despite nearly abnormal basic indicators, Themac Resources reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Wallbridge Mining and Themac Resources

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

The idea behind Wallbridge Mining and Themac Resources 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.

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 Fundamental Analysis module to view fundamental data based on most recent published financial statements.