Correlation Between NEM and THR

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

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

Diversification Opportunities for NEM and THR

-0.14

Correlation Coefficient

NEM  THR

Good diversification

The 3 months correlation between NEM and THR is -0.14. Overlapping area represents the amount of risk that can be diversified away by holding NEM and THR in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on THR and NEM 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 NEM are associated (or correlated) with THR. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of THR has no effect on the direction of NEM i.e., NEM and THR go up and down completely randomly.

Pair Corralation between NEM and THR

If you would invest  1,049,715  in THR on January 20, 2024 and sell it today you would earn a total of  0.00  from holding THR or generate 0.0% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	4.55%
Values	Daily Returns

NEM  vs.  THR

NEM

Risk-Adjusted Performance

0 of 100

Very Weak

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

THR

Risk-Adjusted Performance

0 of 100

Very Weak

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

Pair Trading with NEM and THR

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

The idea behind NEM and THR 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 Sync Your Broker module to sync your existing holdings, watchlists, positions or portfolios from thousands of online brokerage services, banks, investment account aggregators and robo-advisors..