Correlation Between Est Global and Thermaltake Technology

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

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

Diversification Opportunities for Est Global and Thermaltake Technology

0.49

Correlation Coefficient

Est Global  Thermaltake Technology

Very weak diversification

The 3 months correlation between Est and Thermaltake is 0.49. Overlapping area represents the amount of risk that can be diversified away by holding Est Global Apparel and Thermaltake Technology Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Thermaltake Technology and Est Global 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 Est Global Apparel 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 Est Global i.e., Est Global and Thermaltake Technology go up and down completely randomly.

Pair Corralation between Est Global and Thermaltake Technology

Assuming the 90 days trading horizon Est Global Apparel is expected to generate 1.66 times more return on investment than Thermaltake Technology. However, Est Global is 1.66 times more volatile than Thermaltake Technology Co. It trades about -0.01 of its potential returns per unit of risk. Thermaltake Technology Co is currently generating about -0.13 per unit of risk. If you would invest  1,785  in Est Global Apparel on October 26, 2024 and sell it today you would lose (70.00) from holding Est Global Apparel or give up 3.92% of portfolio value over 90 days.

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

Est Global Apparel  vs.  Thermaltake Technology Co

Est Global Apparel

Risk-Adjusted Performance

0 of 100

Very Weak

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

Pair Trading with Est Global and Thermaltake Technology

The main advantage of trading using opposite Est Global and Thermaltake Technology positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Est Global 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 Est Global Apparel 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 Portfolio Holdings module to check your current holdings and cash postion to detemine if your portfolio needs rebalancing.