Correlation Between Themac Resources and Fireweed Zinc

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

Diversification Opportunities for Themac Resources and Fireweed Zinc

0.29

Correlation Coefficient

Themac Resources  Fireweed Zinc

Modest diversification

The 3 months correlation between Themac and Fireweed is 0.29. Overlapping area represents the amount of risk that can be diversified away by holding Themac Resources Group and Fireweed Zinc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Fireweed Zinc 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 Fireweed Zinc. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Fireweed Zinc has no effect on the direction of Themac Resources i.e., Themac Resources and Fireweed Zinc go up and down completely randomly.

Pair Corralation between Themac Resources and Fireweed Zinc

Assuming the 90 days horizon Themac Resources Group is expected to generate 8.14 times more return on investment than Fireweed Zinc. However, Themac Resources is 8.14 times more volatile than Fireweed Zinc. It trades about 0.09 of its potential returns per unit of risk. Fireweed Zinc is currently generating about 0.04 per unit of risk. 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	Very Weak
Accuracy	100.0%
Values	Daily Returns

Themac Resources Group  vs.  Fireweed Zinc

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.

Fireweed Zinc

Risk-Adjusted Performance

2 of 100

Weak

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

Pair Trading with Themac Resources and Fireweed Zinc

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

The idea behind Themac Resources Group and Fireweed Zinc 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 Odds Of Bankruptcy module to get analysis of equity chance of financial distress in the next 2 years.