Correlation Between Graham and Thermon Group

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

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

Diversification Opportunities for Graham and Thermon Group

-0.34

Correlation Coefficient

Graham  Thermon Group

Very good diversification

The 3 months correlation between Graham and Thermon is -0.34. Overlapping area represents the amount of risk that can be diversified away by holding Graham 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 Graham 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 Graham 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 Graham i.e., Graham and Thermon Group go up and down completely randomly.

Pair Corralation between Graham and Thermon Group

Considering the 90-day investment horizon Graham is expected to under-perform the Thermon Group. In addition to that, Graham is 1.86 times more volatile than Thermon Group Holdings. It trades about -0.15 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  2,848  in Thermon Group Holdings on December 28, 2024 and sell it today you would earn a total of  47.00  from holding Thermon Group Holdings or generate 1.65% return on investment over 90 days.

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

Graham  vs.  Thermon Group Holdings

Graham

Risk-Adjusted Performance

Very Weak

Over the last 90 days Graham has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of weak performance in the last few months, the Stock's technical indicators remain very healthy which may send shares a bit higher in April 2025. The recent disarray may also be a sign of long period up-swing for the firm investors.

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 Graham and Thermon Group

The main advantage of trading using opposite Graham and Thermon Group positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Graham 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 Graham 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 FinTech Suite module to use AI to screen and filter profitable investment opportunities.