Correlation Between Sesoda Corp and Thermaltake Technology

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

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

Diversification Opportunities for Sesoda Corp and Thermaltake Technology

0.44

Correlation Coefficient

Sesoda Corp  Thermaltake Technology

Very weak diversification

The 3 months correlation between Sesoda and Thermaltake is 0.44. Overlapping area represents the amount of risk that can be diversified away by holding Sesoda Corp and Thermaltake Technology Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Thermaltake Technology and Sesoda Corp 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 Sesoda Corp are associated (or correlated) with Thermaltake Technology. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Thermaltake Technology has no effect on the direction of Sesoda Corp i.e., Sesoda Corp and Thermaltake Technology go up and down completely randomly.

Pair Corralation between Sesoda Corp and Thermaltake Technology

Assuming the 90 days trading horizon Sesoda Corp is expected to generate 1.28 times less return on investment than Thermaltake Technology. But when comparing it to its historical volatility, Sesoda Corp is 1.66 times less risky than Thermaltake Technology. It trades about 0.31 of its potential returns per unit of risk. Thermaltake Technology Co is currently generating about 0.24 of returns per unit of risk over similar time horizon. If you would invest  3,390  in Thermaltake Technology Co on December 4, 2024 and sell it today you would earn a total of  390.00  from holding Thermaltake Technology Co or generate 11.5% return on investment over 90 days.

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

Sesoda Corp  vs.  Thermaltake Technology Co

Sesoda Corp

Risk-Adjusted Performance

Very Weak

Over the last 90 days Sesoda Corp has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly stable basic indicators, Sesoda Corp is not utilizing all of its potentials. The latest stock price fuss, may contribute to near-short-term losses for the sophisticated investors.

Thermaltake Technology

Risk-Adjusted Performance

Very Weak

Over the last 90 days Thermaltake Technology Co has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly stable basic indicators, Thermaltake Technology is not utilizing all of its potentials. The latest stock price fuss, may contribute to near-short-term losses for the sophisticated investors.

Pair Trading with Sesoda Corp and Thermaltake Technology

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

The idea behind Sesoda Corp and Thermaltake Technology Co 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.