Correlation Between Thermador Groupe and Poujoulat

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

By analyzing existing cross correlation between Thermador Groupe SA and Poujoulat SA, you can compare the effects of market volatilities on Thermador Groupe and Poujoulat 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 Thermador Groupe with a short position of Poujoulat. Check out your portfolio center. Please also check ongoing floating volatility patterns of Thermador Groupe and Poujoulat.

Diversification Opportunities for Thermador Groupe and Poujoulat

-0.29

Correlation Coefficient

Thermador Groupe  Poujoulat

Very good diversification

The 3 months correlation between Thermador and Poujoulat is -0.29. Overlapping area represents the amount of risk that can be diversified away by holding Thermador Groupe SA and Poujoulat SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Poujoulat SA and Thermador Groupe 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 Thermador Groupe SA are associated (or correlated) with Poujoulat. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Poujoulat SA has no effect on the direction of Thermador Groupe i.e., Thermador Groupe and Poujoulat go up and down completely randomly.

Pair Corralation between Thermador Groupe and Poujoulat

Assuming the 90 days trading horizon Thermador Groupe SA is expected to generate 0.68 times more return on investment than Poujoulat. However, Thermador Groupe SA is 1.47 times less risky than Poujoulat. It trades about -0.03 of its potential returns per unit of risk. Poujoulat SA is currently generating about -0.06 per unit of risk. If you would invest  9,206  in Thermador Groupe SA on December 2, 2024 and sell it today you would lose (2,626) from holding Thermador Groupe SA or give up 28.52% of portfolio value over 90 days.

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

Thermador Groupe SA  vs.  Poujoulat SA

Thermador Groupe

Risk-Adjusted Performance

Very Weak

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

Poujoulat SA

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Poujoulat SA are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. Even with relatively weak basic indicators, Poujoulat reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Thermador Groupe and Poujoulat

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

The idea behind Thermador Groupe SA and Poujoulat SA 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 Stocks Directory module to find actively traded stocks across global markets.