Correlation Between Thermador Groupe and Centrale DAchat

Can any of the company-specific risk be diversified away by investing in both Thermador Groupe and Centrale DAchat 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 Centrale DAchat 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 Centrale dAchat Franaise, you can compare the effects of market volatilities on Thermador Groupe and Centrale DAchat 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 Centrale DAchat. Check out your portfolio center. Please also check ongoing floating volatility patterns of Thermador Groupe and Centrale DAchat.

Diversification Opportunities for Thermador Groupe and Centrale DAchat

-0.38

Correlation Coefficient

Thermador Groupe  Centrale DAchat

Very good diversification

The 3 months correlation between Thermador and Centrale is -0.38. Overlapping area represents the amount of risk that can be diversified away by holding Thermador Groupe SA and Centrale dAchat Franaise in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Centrale dAchat Franaise 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 Centrale DAchat. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Centrale dAchat Franaise has no effect on the direction of Thermador Groupe i.e., Thermador Groupe and Centrale DAchat go up and down completely randomly.

Pair Corralation between Thermador Groupe and Centrale DAchat

Assuming the 90 days trading horizon Thermador Groupe SA is expected to under-perform the Centrale DAchat. In addition to that, Thermador Groupe is 1.12 times more volatile than Centrale dAchat Franaise. It trades about -0.04 of its total potential returns per unit of risk. Centrale dAchat Franaise is currently generating about 0.01 per unit of volatility. If you would invest  796.00  in Centrale dAchat Franaise on December 5, 2024 and sell it today you would earn a total of  0.00  from holding Centrale dAchat Franaise or generate 0.0% return on investment over 90 days.

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

Thermador Groupe SA  vs.  Centrale dAchat Franaise

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.

Centrale dAchat Franaise

Risk-Adjusted Performance

Weak

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

Pair Trading with Thermador Groupe and Centrale DAchat

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

The idea behind Thermador Groupe SA and Centrale dAchat Franaise 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 Portfolio Suggestion module to get suggestions outside of your existing asset allocation including your own model portfolios.