Correlation Between Caledonia Mining and Thor Explorations

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

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

Diversification Opportunities for Caledonia Mining and Thor Explorations

0.9

Correlation Coefficient

Caledonia Mining  Thor Explorations

Almost no diversification

The 3 months correlation between Caledonia and Thor is 0.9. Overlapping area represents the amount of risk that can be diversified away by holding Caledonia Mining and Thor Explorations in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Thor Explorations and Caledonia 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 Caledonia Mining 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 Caledonia Mining i.e., Caledonia Mining and Thor Explorations go up and down completely randomly.

Pair Corralation between Caledonia Mining and Thor Explorations

Assuming the 90 days trading horizon Caledonia Mining is expected to generate 0.88 times more return on investment than Thor Explorations. However, Caledonia Mining is 1.14 times less risky than Thor Explorations. It trades about 0.24 of its potential returns per unit of risk. Thor Explorations is currently generating about 0.1 per unit of risk. If you would invest  107,094  in Caledonia Mining on April 20, 2025 and sell it today you would earn a total of  47,906  from holding Caledonia Mining or generate 44.73% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Strong
Accuracy	100.0%
Values	Daily Returns

Caledonia Mining  vs.  Thor Explorations

Caledonia Mining

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Caledonia Mining are ranked lower than 19 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain basic indicators, Caledonia Mining unveiled solid returns over the last few months and may actually be approaching a breakup point.

Thor Explorations

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Thor Explorations are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. In spite of rather uncertain technical and fundamental indicators, Thor Explorations exhibited solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Caledonia Mining and Thor Explorations

The main advantage of trading using opposite Caledonia Mining and Thor Explorations positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Caledonia Mining 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 Caledonia Mining 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.

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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 Equity Valuation module to check real value of public entities based on technical and fundamental data.