Correlation Between THK Co and Aumann AG

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

By analyzing existing cross correlation between THK Co Ltd and Aumann AG, you can compare the effects of market volatilities on THK Co and Aumann AG 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 THK Co with a short position of Aumann AG. Check out your portfolio center. Please also check ongoing floating volatility patterns of THK Co and Aumann AG.

Diversification Opportunities for THK Co and Aumann AG

0.27

Correlation Coefficient

THK Co  Aumann AG

Modest diversification

The 3 months correlation between THK and Aumann is 0.27. Overlapping area represents the amount of risk that can be diversified away by holding THK Co Ltd and Aumann AG in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Aumann AG and THK Co 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 THK Co Ltd are associated (or correlated) with Aumann AG. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Aumann AG has no effect on the direction of THK Co i.e., THK Co and Aumann AG go up and down completely randomly.

Pair Corralation between THK Co and Aumann AG

Assuming the 90 days horizon THK Co Ltd is expected to generate 0.76 times more return on investment than Aumann AG. However, THK Co Ltd is 1.31 times less risky than Aumann AG. It trades about 0.06 of its potential returns per unit of risk. Aumann AG is currently generating about -0.09 per unit of risk. If you would invest  1,215  in THK Co Ltd on December 4, 2024 and sell it today you would earn a total of  84.00  from holding THK Co Ltd or generate 6.91% return on investment over 90 days.

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

THK Co Ltd  vs.  Aumann AG

THK Co

Risk-Adjusted Performance

Modest

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

Aumann AG

Risk-Adjusted Performance

Very Weak

Over the last 90 days Aumann AG has generated negative risk-adjusted returns adding no value to investors with long positions. Despite fragile performance in the last few months, the Stock's primary indicators remain nearly stable which may send shares a bit higher in April 2025. The current disturbance may also be a sign of long-run up-swing for the company stockholders.

Pair Trading with THK Co and Aumann AG

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

The idea behind THK Co Ltd and Aumann AG 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 Stock Screener module to find equities using a custom stock filter or screen asymmetry in trading patterns, price, volume, or investment outlook..