Correlation Between Enerpac Tool and Thermon Group

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

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

Diversification Opportunities for Enerpac Tool and Thermon Group

0.09

Correlation Coefficient

Enerpac Tool  Thermon Group

Significant diversification

The 3 months correlation between Enerpac and Thermon is 0.09. Overlapping area represents the amount of risk that can be diversified away by holding Enerpac Tool Group 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 Enerpac Tool 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 Enerpac Tool Group 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 Enerpac Tool i.e., Enerpac Tool and Thermon Group go up and down completely randomly.

Pair Corralation between Enerpac Tool and Thermon Group

Given the investment horizon of 90 days Enerpac Tool Group is expected to generate 0.97 times more return on investment than Thermon Group. However, Enerpac Tool Group is 1.03 times less risky than Thermon Group. It trades about 0.07 of its potential returns per unit of risk. Thermon Group Holdings is currently generating about 0.02 per unit of risk. If you would invest  4,139  in Enerpac Tool Group on December 29, 2024 and sell it today you would earn a total of  341.00  from holding Enerpac Tool Group or generate 8.24% return on investment over 90 days.

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

Enerpac Tool Group  vs.  Thermon Group Holdings

Enerpac Tool Group

Risk-Adjusted Performance

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Enerpac Tool Group are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. In spite of rather weak basic indicators, Enerpac Tool may actually be approaching a critical reversion point that can send shares even higher in April 2025.

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 Enerpac Tool and Thermon Group

The main advantage of trading using opposite Enerpac Tool and Thermon Group positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Enerpac Tool 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 Enerpac Tool Group 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 Volatility Analysis module to get historical volatility and risk analysis based on latest market data.