Correlation Between Thrace Plastics and Profile Systems

Can any of the company-specific risk be diversified away by investing in both Thrace Plastics and Profile Systems 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 Profile Systems 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 Profile Systems Software, you can compare the effects of market volatilities on Thrace Plastics and Profile Systems 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 Profile Systems. Check out your portfolio center. Please also check ongoing floating volatility patterns of Thrace Plastics and Profile Systems.

Diversification Opportunities for Thrace Plastics and Profile Systems

0.4

Correlation Coefficient

Thrace Plastics  Profile Systems

Very weak diversification

The 3 months correlation between Thrace and Profile is 0.4. Overlapping area represents the amount of risk that can be diversified away by holding Thrace Plastics Holding and Profile Systems Software in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Profile Systems Software 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 Profile Systems. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Profile Systems Software has no effect on the direction of Thrace Plastics i.e., Thrace Plastics and Profile Systems go up and down completely randomly.

Pair Corralation between Thrace Plastics and Profile Systems

Assuming the 90 days trading horizon Thrace Plastics Holding is expected to generate 1.36 times more return on investment than Profile Systems. However, Thrace Plastics is 1.36 times more volatile than Profile Systems Software. It trades about 0.06 of its potential returns per unit of risk. Profile Systems Software is currently generating about 0.01 per unit of risk. If you would invest  392.00  in Thrace Plastics Holding on December 28, 2024 and sell it today you would earn a total of  22.00  from holding Thrace Plastics Holding or generate 5.61% return on investment over 90 days.

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

Thrace Plastics Holding  vs.  Profile Systems Software

Thrace Plastics Holding

Risk-Adjusted Performance

Modest

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

Profile Systems Software

Risk-Adjusted Performance

Very Weak

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

Pair Trading with Thrace Plastics and Profile Systems

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

The idea behind Thrace Plastics Holding and Profile Systems Software 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 Investing Opportunities module to build portfolios using our predefined set of ideas and optimize them against your investing preferences.