Correlation Between Helios Technologies and Thermon Group

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

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

Diversification Opportunities for Helios Technologies and Thermon Group

0.69

Correlation Coefficient

Helios Technologies  Thermon Group

Poor diversification

The 3 months correlation between Helios and Thermon is 0.69. Overlapping area represents the amount of risk that can be diversified away by holding Helios Technologies 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 Helios Technologies 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 Helios Technologies 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 Helios Technologies i.e., Helios Technologies and Thermon Group go up and down completely randomly.

Pair Corralation between Helios Technologies and Thermon Group

Given the investment horizon of 90 days Helios Technologies is expected to under-perform the Thermon Group. In addition to that, Helios Technologies is 1.1 times more volatile than Thermon Group Holdings. It trades about -0.49 of its total potential returns per unit of risk. Thermon Group Holdings is currently generating about -0.28 per unit of volatility. If you would invest  3,205  in Thermon Group Holdings on October 6, 2024 and sell it today you would lose (274.00) from holding Thermon Group Holdings or give up 8.55% of portfolio value over 90 days.

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

Helios Technologies  vs.  Thermon Group Holdings

Helios Technologies

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Helios Technologies has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of very healthy forward indicators, Helios Technologies is not utilizing all of its potentials. The recent stock price disarray, may contribute to short-term losses for the investors.

Thermon Group Holdings

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Thermon Group Holdings are ranked lower than 2 (%) 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 Helios Technologies and Thermon Group

The main advantage of trading using opposite Helios Technologies and Thermon Group positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Helios Technologies 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 Helios Technologies 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.

Check out your portfolio center.

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 Commodity Directory module to find actively traded commodities issued by global exchanges.