Correlation Between Therma Bright and Abacus Mining

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

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

Diversification Opportunities for Therma Bright and Abacus Mining

-0.65

Correlation Coefficient

Therma Bright  Abacus Mining

Excellent diversification

The 3 months correlation between Therma and Abacus is -0.65. Overlapping area represents the amount of risk that can be diversified away by holding Therma Bright and Abacus Mining and in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Abacus Mining and Therma Bright 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 Therma Bright are associated (or correlated) with Abacus Mining. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Abacus Mining has no effect on the direction of Therma Bright i.e., Therma Bright and Abacus Mining go up and down completely randomly.

Pair Corralation between Therma Bright and Abacus Mining

Assuming the 90 days trading horizon Therma Bright is expected to generate 3.68 times more return on investment than Abacus Mining. However, Therma Bright is 3.68 times more volatile than Abacus Mining and. It trades about 0.08 of its potential returns per unit of risk. Abacus Mining and is currently generating about 0.11 per unit of risk. If you would invest  1.50  in Therma Bright on February 4, 2024 and sell it today you would lose (0.50) from holding Therma Bright or give up 33.33% of portfolio value over 90 days.

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

Therma Bright  vs.  Abacus Mining and

Therma Bright

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Therma Bright are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. In spite of fairly abnormal basic indicators, Therma Bright showed solid returns over the last few months and may actually be approaching a breakup point.

Abacus Mining

Risk-Adjusted Performance

6 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Abacus Mining and are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. In spite of fairly abnormal basic indicators, Abacus Mining showed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Therma Bright and Abacus Mining

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

The idea behind Therma Bright and Abacus Mining and 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 Watchlist Optimization module to optimize watchlists to build efficient portfolios or rebalance existing positions based on the mean-variance optimization algorithm.