Correlation Between Thales SA and Conrad Industries

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

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

Diversification Opportunities for Thales SA and Conrad Industries

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Correlation Coefficient

Thales SA  Conrad Industries

Pay attention - limited upside

The 3 months correlation between Thales and Conrad is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding Thales SA and Conrad Industries in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Conrad Industries and Thales SA 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 Thales SA are associated (or correlated) with Conrad Industries. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Conrad Industries has no effect on the direction of Thales SA i.e., Thales SA and Conrad Industries go up and down completely randomly.

Pair Corralation between Thales SA and Conrad Industries

Assuming the 90 days horizon Thales SA is expected to generate 0.62 times more return on investment than Conrad Industries. However, Thales SA is 1.61 times less risky than Conrad Industries. It trades about 0.03 of its potential returns per unit of risk. Conrad Industries is currently generating about -0.07 per unit of risk. If you would invest  12,980  in Thales SA on October 21, 2024 and sell it today you would earn a total of  2,043  from holding Thales SA or generate 15.74% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Flat
Strength	Insignificant
Accuracy	35.48%
Values	Daily Returns

Thales SA  vs.  Conrad Industries

Thales SA

Risk-Adjusted Performance

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Very Weak

Over the last 90 days Thales SA has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest weak performance, the Stock's technical and fundamental indicators remain stable and the current disturbance on Wall Street may also be a sign of long-run gains for the company stockholders.

Conrad Industries

Risk-Adjusted Performance

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Very Weak

Over the last 90 days Conrad Industries has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of rather sound basic indicators, Conrad Industries is not utilizing all of its potentials. The current stock price tumult, may contribute to shorter-term losses for the shareholders.

Pair Trading with Thales SA and Conrad Industries

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

The idea behind Thales SA and Conrad Industries 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 Exposure Probability module to analyze equity upside and downside potential for a given time horizon across multiple markets.