Correlation Between Neolife SA and Thermador Groupe

Can any of the company-specific risk be diversified away by investing in both Neolife SA and Thermador Groupe 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 Neolife SA and Thermador Groupe into the same portfolio, which is an essential part of the fundamental portfolio management process.

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

Diversification Opportunities for Neolife SA and Thermador Groupe

0.24

Correlation Coefficient

Neolife SA  Thermador Groupe

Modest diversification

The 3 months correlation between Neolife and Thermador is 0.24. Overlapping area represents the amount of risk that can be diversified away by holding Neolife SA and Thermador Groupe SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Thermador Groupe and Neolife SA 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 Neolife SA are associated (or correlated) with Thermador Groupe. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Thermador Groupe has no effect on the direction of Neolife SA i.e., Neolife SA and Thermador Groupe go up and down completely randomly.

Pair Corralation between Neolife SA and Thermador Groupe

Assuming the 90 days trading horizon Neolife SA is expected to generate 1.89 times more return on investment than Thermador Groupe. However, Neolife SA is 1.89 times more volatile than Thermador Groupe SA. It trades about 0.01 of its potential returns per unit of risk. Thermador Groupe SA is currently generating about -0.04 per unit of risk. If you would invest  6.42  in Neolife SA on September 25, 2024 and sell it today you would lose (0.22) from holding Neolife SA or give up 3.43% of portfolio value over 90 days.

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

Neolife SA  vs.  Thermador Groupe SA

Neolife SA

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Neolife SA has generated negative risk-adjusted returns adding no value to investors with long positions. Even with relatively invariable basic indicators, Neolife SA is not utilizing all of its potentials. The current stock price agitation, may contribute to short-term losses for the retail investors.

Thermador Groupe

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Thermador Groupe SA has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest weak performance, the Stock's basic indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for the company investors.

Pair Trading with Neolife SA and Thermador Groupe

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

The idea behind Neolife SA and Thermador Groupe SA 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 Share Portfolio module to track or share privately all of your investments from the convenience of any device.