Correlation Between Thor Mining and Zegona Communications

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

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

Diversification Opportunities for Thor Mining and Zegona Communications

-0.28

Correlation Coefficient

Thor Mining  Zegona Communications

Very good diversification

The 3 months correlation between Thor and Zegona is -0.28. Overlapping area represents the amount of risk that can be diversified away by holding Thor Mining PLC and Zegona Communications Plc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Zegona Communications Plc and Thor 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 Thor Mining PLC are associated (or correlated) with Zegona Communications. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Zegona Communications Plc has no effect on the direction of Thor Mining i.e., Thor Mining and Zegona Communications go up and down completely randomly.

Pair Corralation between Thor Mining and Zegona Communications

Assuming the 90 days trading horizon Thor Mining PLC is expected to under-perform the Zegona Communications. In addition to that, Thor Mining is 1.48 times more volatile than Zegona Communications Plc. It trades about -0.32 of its total potential returns per unit of risk. Zegona Communications Plc is currently generating about 0.15 per unit of volatility. If you would invest  30,600  in Zegona Communications Plc on September 12, 2024 and sell it today you would earn a total of  2,400  from holding Zegona Communications Plc or generate 7.84% return on investment over 90 days.

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

Thor Mining PLC  vs.  Zegona Communications Plc

Thor Mining PLC

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Thor Mining PLC has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of uncertain performance in the last few months, the Stock's technical and fundamental indicators remain rather sound which may send shares a bit higher in January 2025. The latest tumult may also be a sign of longer-term up-swing for the firm shareholders.

Zegona Communications Plc

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Zegona Communications Plc has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of rather sound technical and fundamental indicators, Zegona Communications is not utilizing all of its potentials. The latest stock price tumult, may contribute to shorter-term losses for the shareholders.

Pair Trading with Thor Mining and Zegona Communications

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

The idea behind Thor Mining PLC and Zegona Communications Plc 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 Portfolio Optimization module to compute new portfolio that will generate highest expected return given your specified tolerance for risk.