Correlation Between Thales SA and Nauticus Robotics

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

By analyzing existing cross correlation between Thales SA ADR and Nauticus Robotics, you can compare the effects of market volatilities on Thales SA and Nauticus Robotics 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 Nauticus Robotics. Check out your portfolio center. Please also check ongoing floating volatility patterns of Thales SA and Nauticus Robotics.

Diversification Opportunities for Thales SA and Nauticus Robotics

-0.36

Correlation Coefficient

Thales SA  Nauticus Robotics

Very good diversification

The 3 months correlation between Thales and Nauticus is -0.36. Overlapping area represents the amount of risk that can be diversified away by holding Thales SA ADR and Nauticus Robotics in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Nauticus Robotics 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 ADR are associated (or correlated) with Nauticus Robotics. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Nauticus Robotics has no effect on the direction of Thales SA i.e., Thales SA and Nauticus Robotics go up and down completely randomly.

Pair Corralation between Thales SA and Nauticus Robotics

Assuming the 90 days horizon Thales SA ADR is expected to under-perform the Nauticus Robotics. But the pink sheet apears to be less risky and, when comparing its historical volatility, Thales SA ADR is 12.14 times less risky than Nauticus Robotics. The pink sheet trades about -0.05 of its potential returns per unit of risk. The Nauticus Robotics is currently generating about 0.09 of returns per unit of risk over similar time horizon. If you would invest  2.51  in Nauticus Robotics on September 29, 2024 and sell it today you would earn a total of  2.48  from holding Nauticus Robotics or generate 98.8% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	98.41%
Values	Daily Returns

Thales SA ADR  vs.  Nauticus Robotics

Thales SA ADR

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Thales SA ADR has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest weak performance, the Stock's essential indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for the company investors.

Nauticus Robotics

Risk-Adjusted Performance

11 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Nauticus Robotics are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. In spite of fairly uncertain basic indicators, Nauticus Robotics showed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Thales SA and Nauticus Robotics

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

The idea behind Thales SA ADR and Nauticus Robotics 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 Balance Of Power module to check stock momentum by analyzing Balance Of Power indicator and other technical ratios.