Correlation Between Standex International and Thermon Group

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

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

Diversification Opportunities for Standex International and Thermon Group

-0.25

Correlation Coefficient

Standex International  Thermon Group

Very good diversification

The 3 months correlation between Standex and Thermon is -0.25. Overlapping area represents the amount of risk that can be diversified away by holding Standex International 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 Standex International 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 Standex International 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 Standex International i.e., Standex International and Thermon Group go up and down completely randomly.

Pair Corralation between Standex International and Thermon Group

Considering the 90-day investment horizon Standex International is expected to under-perform the Thermon Group. But the stock apears to be less risky and, when comparing its historical volatility, Standex International is 1.19 times less risky than Thermon Group. The stock trades about -0.14 of its potential returns per unit of risk. The Thermon Group Holdings is currently generating about 0.01 of returns per unit of risk over similar time horizon. If you would invest  2,848  in Thermon Group Holdings on December 28, 2024 and sell it today you would lose (8.00) from holding Thermon Group Holdings or give up 0.28% of portfolio value over 90 days.

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

Standex International  vs.  Thermon Group Holdings

Standex International

Risk-Adjusted Performance

Very Weak

Over the last 90 days Standex International has generated negative risk-adjusted returns adding no value to investors with long positions. Despite unsteady performance in the last few months, the Stock's basic indicators remain fairly strong which may send shares a bit higher in April 2025. The recent confusion may also be a sign of long-lasting up-swing for the firm traders.

Thermon Group Holdings

Risk-Adjusted Performance

Very Weak

Over the last 90 days Thermon Group Holdings has generated negative risk-adjusted returns adding no value to investors with long positions. 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 Standex International and Thermon Group

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

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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 Price Ceiling Movement module to calculate and plot Price Ceiling Movement for different equity instruments.