Correlation Between CRA International and Thermon Group

Can any of the company-specific risk be diversified away by investing in both CRA International and Thermon Group 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 CRA International and Thermon Group into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between CRA International and Thermon Group Holdings, you can compare the effects of market volatilities on CRA International and Thermon Group 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 CRA International with a short position of Thermon Group. Check out your portfolio center. Please also check ongoing floating volatility patterns of CRA International and Thermon Group.

Diversification Opportunities for CRA International and Thermon Group

0.01

Correlation Coefficient

CRA International  Thermon Group

Significant diversification

The 3 months correlation between CRA and Thermon is 0.01. Overlapping area represents the amount of risk that can be diversified away by holding CRA International and Thermon Group Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Thermon Group Holdings and CRA International 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 CRA International are associated (or correlated) with Thermon Group. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Thermon Group Holdings has no effect on the direction of CRA International i.e., CRA International and Thermon Group go up and down completely randomly.

Pair Corralation between CRA International and Thermon Group

Given the investment horizon of 90 days CRA International is expected to under-perform the Thermon Group. In addition to that, CRA International is 1.18 times more volatile than Thermon Group Holdings. It trades about -0.03 of its total potential returns per unit of risk. Thermon Group Holdings is currently generating about 0.02 per unit of volatility. If you would invest  2,862  in Thermon Group Holdings on December 27, 2024 and sell it today you would earn a total of  33.00  from holding Thermon Group Holdings or generate 1.15% return on investment over 90 days.

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

CRA International  vs.  Thermon Group Holdings

CRA International

Risk-Adjusted Performance

Very Weak

Over the last 90 days CRA International has generated negative risk-adjusted returns adding no value to investors with long positions. Despite fairly strong basic indicators, CRA International is not utilizing all of its potentials. The latest stock price confusion, may contribute to short-horizon losses for the traders.

Thermon Group Holdings

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Thermon Group Holdings are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. Even with relatively invariable technical indicators, Thermon Group is not utilizing all of its potentials. The latest stock price agitation, may contribute to short-term losses for the retail investors.

Pair Trading with CRA International and Thermon Group

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

The idea behind CRA International and Thermon Group Holdings 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 Equity Search module to search for actively traded equities including funds and ETFs from over 30 global markets.