Correlation Between Elis SA and Thermador Groupe

Can any of the company-specific risk be diversified away by investing in both Elis 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 Elis 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 Elis SA and Thermador Groupe SA, you can compare the effects of market volatilities on Elis 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 Elis SA with a short position of Thermador Groupe. Check out your portfolio center. Please also check ongoing floating volatility patterns of Elis SA and Thermador Groupe.

Diversification Opportunities for Elis SA and Thermador Groupe

-0.57

Correlation Coefficient

Elis SA  Thermador Groupe

Excellent diversification

The 3 months correlation between Elis and Thermador is -0.57. Overlapping area represents the amount of risk that can be diversified away by holding Elis 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 Elis 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 Elis 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 Elis SA i.e., Elis SA and Thermador Groupe go up and down completely randomly.

Pair Corralation between Elis SA and Thermador Groupe

Assuming the 90 days trading horizon Elis SA is expected to generate 1.43 times more return on investment than Thermador Groupe. However, Elis SA is 1.43 times more volatile than Thermador Groupe SA. It trades about 0.13 of its potential returns per unit of risk. Thermador Groupe SA is currently generating about -0.07 per unit of risk. If you would invest  1,884  in Elis SA on December 25, 2024 and sell it today you would earn a total of  268.00  from holding Elis SA or generate 14.23% return on investment over 90 days.

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

Elis SA  vs.  Thermador Groupe SA

Elis SA

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Elis SA are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Elis SA sustained solid returns over the last few months and may actually be approaching a breakup point.

Thermador Groupe

Risk-Adjusted Performance

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 somewhat strong basic indicators, Thermador Groupe is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Elis SA and Thermador Groupe

The main advantage of trading using opposite Elis SA and Thermador Groupe positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Elis 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 Elis 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 Idea Breakdown module to analyze constituents of all Macroaxis ideas. Macroaxis investment ideas are predefined, sector-focused investing themes.