Correlation Between New Wave and Thule Group

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

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

Diversification Opportunities for New Wave and Thule Group

-0.48

Correlation Coefficient

New Wave  Thule Group

Very good diversification

The 3 months correlation between New and Thule is -0.48. Overlapping area represents the amount of risk that can be diversified away by holding New Wave Group and Thule Group AB in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Thule Group AB and New Wave 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 New Wave Group are associated (or correlated) with Thule Group. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Thule Group AB has no effect on the direction of New Wave i.e., New Wave and Thule Group go up and down completely randomly.

Pair Corralation between New Wave and Thule Group

Assuming the 90 days trading horizon New Wave Group is expected to under-perform the Thule Group. But the stock apears to be less risky and, when comparing its historical volatility, New Wave Group is 1.26 times less risky than Thule Group. The stock trades about -0.05 of its potential returns per unit of risk. The Thule Group AB is currently generating about 0.14 of returns per unit of risk over similar time horizon. If you would invest  28,746  in Thule Group AB on September 4, 2024 and sell it today you would earn a total of  6,994  from holding Thule Group AB or generate 24.33% return on investment over 90 days.

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

New Wave Group  vs.  Thule Group AB

New Wave Group

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days New Wave Group has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest uncertain performance, the Stock's basic indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for the company investors.

Thule Group AB

Risk-Adjusted Performance

10 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Thule Group AB are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively weak basic indicators, Thule Group unveiled solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with New Wave and Thule Group

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

The idea behind New Wave Group and Thule Group AB 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 Fundamental Analysis module to view fundamental data based on most recent published financial statements.