Correlation Between Thrace Plastics and GEK TERNA

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

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

Diversification Opportunities for Thrace Plastics and GEK TERNA

0.26

Correlation Coefficient

Thrace Plastics  GEK TERNA

Modest diversification

The 3 months correlation between Thrace and GEK is 0.26. Overlapping area represents the amount of risk that can be diversified away by holding Thrace Plastics Holding and GEK TERNA Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on GEK TERNA Holdings and Thrace Plastics 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 Thrace Plastics Holding are associated (or correlated) with GEK TERNA. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of GEK TERNA Holdings has no effect on the direction of Thrace Plastics i.e., Thrace Plastics and GEK TERNA go up and down completely randomly.

Pair Corralation between Thrace Plastics and GEK TERNA

Assuming the 90 days trading horizon Thrace Plastics Holding is expected to generate 1.92 times more return on investment than GEK TERNA. However, Thrace Plastics is 1.92 times more volatile than GEK TERNA Holdings. It trades about -0.01 of its potential returns per unit of risk. GEK TERNA Holdings is currently generating about -0.07 per unit of risk. If you would invest  394.00  in Thrace Plastics Holding on December 4, 2024 and sell it today you would lose (7.00) from holding Thrace Plastics Holding or give up 1.78% of portfolio value over 90 days.

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

Thrace Plastics Holding  vs.  GEK TERNA Holdings

Thrace Plastics Holding

Risk-Adjusted Performance

Very Weak

Over the last 90 days Thrace Plastics Holding has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable basic indicators, Thrace Plastics is not utilizing all of its potentials. The newest stock price uproar, may contribute to short-horizon losses for the private investors.

GEK TERNA Holdings

Risk-Adjusted Performance

Very Weak

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

Pair Trading with Thrace Plastics and GEK TERNA

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

The idea behind Thrace Plastics Holding and GEK TERNA 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 Aroon Oscillator module to analyze current equity momentum using Aroon Oscillator and other momentum ratios.