Correlation Between Dynamic Medical and Thermaltake Technology

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

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

Diversification Opportunities for Dynamic Medical and Thermaltake Technology

0.08

Correlation Coefficient

Dynamic Medical  Thermaltake Technology

Significant diversification

The 3 months correlation between Dynamic and Thermaltake is 0.08. Overlapping area represents the amount of risk that can be diversified away by holding Dynamic Medical Technologies and Thermaltake Technology Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Thermaltake Technology and Dynamic Medical 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 Dynamic Medical Technologies 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 Dynamic Medical i.e., Dynamic Medical and Thermaltake Technology go up and down completely randomly.

Pair Corralation between Dynamic Medical and Thermaltake Technology

Assuming the 90 days trading horizon Dynamic Medical Technologies is expected to generate 0.84 times more return on investment than Thermaltake Technology. However, Dynamic Medical Technologies is 1.19 times less risky than Thermaltake Technology. It trades about 0.05 of its potential returns per unit of risk. Thermaltake Technology Co is currently generating about 0.03 per unit of risk. If you would invest  6,085  in Dynamic Medical Technologies on September 26, 2024 and sell it today you would earn a total of  3,115  from holding Dynamic Medical Technologies or generate 51.19% return on investment over 90 days.

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

Dynamic Medical Technologies  vs.  Thermaltake Technology Co

Dynamic Medical Tech

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Dynamic Medical Technologies has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly stable basic indicators, Dynamic Medical 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

0 of 100

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 Dynamic Medical and Thermaltake Technology

The main advantage of trading using opposite Dynamic Medical and Thermaltake Technology positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Dynamic Medical 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 Dynamic Medical Technologies 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 Alpha Finder module to use alpha and beta coefficients to find investment opportunities after accounting for the risk.