Correlation Between Themac Resources and Gunpoint Exploration

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

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

Diversification Opportunities for Themac Resources and Gunpoint Exploration

-0.16

Correlation Coefficient

Themac Resources  Gunpoint Exploration

Good diversification

The 3 months correlation between Themac and Gunpoint is -0.16. Overlapping area represents the amount of risk that can be diversified away by holding Themac Resources Group and Gunpoint Exploration in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Gunpoint Exploration and Themac Resources 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 Themac Resources Group are associated (or correlated) with Gunpoint Exploration. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Gunpoint Exploration has no effect on the direction of Themac Resources i.e., Themac Resources and Gunpoint Exploration go up and down completely randomly.

Pair Corralation between Themac Resources and Gunpoint Exploration

Assuming the 90 days horizon Themac Resources Group is expected to generate 3.5 times more return on investment than Gunpoint Exploration. However, Themac Resources is 3.5 times more volatile than Gunpoint Exploration. It trades about 0.03 of its potential returns per unit of risk. Gunpoint Exploration is currently generating about -0.01 per unit of risk. If you would invest  3.00  in Themac Resources Group on August 30, 2024 and sell it today you would lose (0.50) from holding Themac Resources Group or give up 16.67% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	98.41%
Values	Daily Returns

Themac Resources Group  vs.  Gunpoint Exploration

Themac Resources

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Themac Resources Group are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. In spite of fairly unfluctuating basic indicators, Themac Resources showed solid returns over the last few months and may actually be approaching a breakup point.

Gunpoint Exploration

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Gunpoint Exploration has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly stable basic indicators, Gunpoint Exploration is not utilizing all of its potentials. The recent stock price fuss, may contribute to near-short-term losses for the sophisticated investors.

Pair Trading with Themac Resources and Gunpoint Exploration

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

The idea behind Themac Resources Group and Gunpoint Exploration 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.