Correlation Between Global Energy and Themac Resources

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

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

Diversification Opportunities for Global Energy and Themac Resources

0.06

Correlation Coefficient

Global Energy  Themac Resources

Significant diversification

The 3 months correlation between Global and Themac is 0.06. Overlapping area represents the amount of risk that can be diversified away by holding Global Energy Metals and Themac Resources Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Themac Resources and Global Energy 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 Global Energy Metals 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 Global Energy i.e., Global Energy and Themac Resources go up and down completely randomly.

Pair Corralation between Global Energy and Themac Resources

Assuming the 90 days horizon Global Energy is expected to generate 3.34 times less return on investment than Themac Resources. But when comparing it to its historical volatility, Global Energy Metals is 2.33 times less risky than Themac Resources. It trades about 0.06 of its potential returns per unit of risk. Themac Resources Group is currently generating about 0.09 of returns per unit of risk over similar time horizon. If you would invest  3.50  in Themac Resources Group on September 15, 2024 and sell it today you would lose (0.54) from holding Themac Resources Group or give up 15.43% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	98.46%
Values	Daily Returns

Global Energy Metals  vs.  Themac Resources Group

Global Energy Metals

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Global Energy Metals are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile technical and fundamental indicators, Global Energy reported solid returns over the last few months and may actually be approaching a breakup point.

Themac Resources

Risk-Adjusted Performance

6 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Themac Resources Group are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, Themac Resources reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Global Energy and Themac Resources

The main advantage of trading using opposite Global Energy and Themac Resources positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Global Energy 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 Global Energy Metals 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.

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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 Earnings Calls module to check upcoming earnings announcements updated hourly across public exchanges.