Correlation Between Ampleforth and Thor Explorations

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

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

Diversification Opportunities for Ampleforth and Thor Explorations

-0.03

Correlation Coefficient

Ampleforth  Thor Explorations

Good diversification

The 3 months correlation between Ampleforth and Thor is -0.03. Overlapping area represents the amount of risk that can be diversified away by holding Ampleforth and Thor Explorations in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Thor Explorations and Ampleforth 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 Ampleforth are associated (or correlated) with Thor Explorations. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Thor Explorations has no effect on the direction of Ampleforth i.e., Ampleforth and Thor Explorations go up and down completely randomly.

Pair Corralation between Ampleforth and Thor Explorations

Assuming the 90 days trading horizon Ampleforth is expected to generate 2.0 times less return on investment than Thor Explorations. But when comparing it to its historical volatility, Ampleforth is 1.27 times less risky than Thor Explorations. It trades about 0.03 of its potential returns per unit of risk. Thor Explorations is currently generating about 0.05 of returns per unit of risk over similar time horizon. If you would invest  20.00  in Thor Explorations on September 12, 2024 and sell it today you would earn a total of  1.00  from holding Thor Explorations or generate 5.0% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	98.44%
Values	Daily Returns

Ampleforth  vs.  Thor Explorations

Ampleforth

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Ampleforth are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. In spite of rather unsteady fundamental indicators, Ampleforth may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Thor Explorations

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Thor Explorations are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, Thor Explorations reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Ampleforth and Thor Explorations

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

The idea behind Ampleforth and Thor Explorations 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.