Correlation Between Grupo Sports and Thermo Fisher

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

By analyzing existing cross correlation between Grupo Sports World and Thermo Fisher Scientific, you can compare the effects of market volatilities on Grupo Sports and Thermo Fisher 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 Grupo Sports with a short position of Thermo Fisher. Check out your portfolio center. Please also check ongoing floating volatility patterns of Grupo Sports and Thermo Fisher.

Diversification Opportunities for Grupo Sports and Thermo Fisher

-0.36

Correlation Coefficient

Grupo Sports  Thermo Fisher

Very good diversification

The 3 months correlation between Grupo and Thermo is -0.36. Overlapping area represents the amount of risk that can be diversified away by holding Grupo Sports World and Thermo Fisher Scientific in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Thermo Fisher Scientific and Grupo Sports 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 Grupo Sports World are associated (or correlated) with Thermo Fisher. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Thermo Fisher Scientific has no effect on the direction of Grupo Sports i.e., Grupo Sports and Thermo Fisher go up and down completely randomly.

Pair Corralation between Grupo Sports and Thermo Fisher

Assuming the 90 days trading horizon Grupo Sports World is expected to under-perform the Thermo Fisher. But the stock apears to be less risky and, when comparing its historical volatility, Grupo Sports World is 1.2 times less risky than Thermo Fisher. The stock trades about -0.03 of its potential returns per unit of risk. The Thermo Fisher Scientific is currently generating about -0.01 of returns per unit of risk over similar time horizon. If you would invest  1,060,120  in Thermo Fisher Scientific on December 24, 2024 and sell it today you would lose (15,320) from holding Thermo Fisher Scientific or give up 1.45% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	98.36%
Values	Daily Returns

Grupo Sports World  vs.  Thermo Fisher Scientific

Grupo Sports World

Risk-Adjusted Performance

Very Weak

Over the last 90 days Grupo Sports World has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong basic indicators, Grupo Sports is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Thermo Fisher Scientific

Risk-Adjusted Performance

Very Weak

Over the last 90 days Thermo Fisher Scientific has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly strong basic indicators, Thermo Fisher is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Grupo Sports and Thermo Fisher

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

The idea behind Grupo Sports World and Thermo Fisher Scientific 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 Instant Ratings module to determine any equity ratings based on digital recommendations. Macroaxis instant equity ratings are based on combination of fundamental analysis and risk-adjusted market performance.