Correlation Between Chernan Metal and Thermaltake Technology

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

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

Diversification Opportunities for Chernan Metal and Thermaltake Technology

-0.45

Correlation Coefficient

Chernan Metal  Thermaltake Technology

Very good diversification

The 3 months correlation between Chernan and Thermaltake is -0.45. Overlapping area represents the amount of risk that can be diversified away by holding Chernan Metal Industrial and Thermaltake Technology Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Thermaltake Technology and Chernan Metal 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 Chernan Metal Industrial 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 Chernan Metal i.e., Chernan Metal and Thermaltake Technology go up and down completely randomly.

Pair Corralation between Chernan Metal and Thermaltake Technology

Assuming the 90 days trading horizon Chernan Metal is expected to generate 3.32 times less return on investment than Thermaltake Technology. But when comparing it to its historical volatility, Chernan Metal Industrial is 1.27 times less risky than Thermaltake Technology. It trades about 0.01 of its potential returns per unit of risk. Thermaltake Technology Co is currently generating about 0.04 of returns per unit of risk over similar time horizon. If you would invest  2,678  in Thermaltake Technology Co on September 14, 2024 and sell it today you would earn a total of  1,022  from holding Thermaltake Technology Co or generate 38.16% return on investment over 90 days.

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

Chernan Metal Industrial  vs.  Thermaltake Technology Co

Chernan Metal Industrial

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Chernan Metal Industrial has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest abnormal performance, the Stock's basic indicators remain stable and the latest fuss on Wall Street may also be a sign of long-term gains for the venture sophisticated investors.

Thermaltake Technology

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Thermaltake Technology Co are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. 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 Chernan Metal and Thermaltake Technology

The main advantage of trading using opposite Chernan Metal and Thermaltake Technology positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Chernan Metal 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 Chernan Metal Industrial 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.

Check out your portfolio center.

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 Funds Screener module to find actively-traded funds from around the world traded on over 30 global exchanges.