Correlation Between Thermon Group and CRA International

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

By analyzing existing cross correlation between Thermon Group Holdings and CRA International, you can compare the effects of market volatilities on Thermon Group and CRA International 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 Thermon Group with a short position of CRA International. Check out your portfolio center. Please also check ongoing floating volatility patterns of Thermon Group and CRA International.

Diversification Opportunities for Thermon Group and CRA International

0.0

Correlation Coefficient

Thermon Group  CRA International

Pay attention - limited upside

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

Pair Corralation between Thermon Group and CRA International

Considering the 90-day investment horizon Thermon Group Holdings is expected to generate 0.85 times more return on investment than CRA International. However, Thermon Group Holdings is 1.18 times less risky than CRA International. It trades about 0.02 of its potential returns per unit of risk. CRA International is currently generating about -0.03 per unit of risk. If you would invest  2,862  in Thermon Group Holdings on December 27, 2024 and sell it today you would earn a total of  33.00  from holding Thermon Group Holdings or generate 1.15% return on investment over 90 days.

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

Thermon Group Holdings  vs.  CRA International

Thermon Group Holdings

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Thermon Group Holdings are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. Even with relatively invariable technical indicators, Thermon Group is not utilizing all of its potentials. The latest stock price agitation, may contribute to short-term losses for the retail investors.

CRA International

Risk-Adjusted Performance

Very Weak

Over the last 90 days CRA International has generated negative risk-adjusted returns adding no value to investors with long positions. Despite fairly strong basic indicators, CRA International is not utilizing all of its potentials. The current stock price confusion, may contribute to short-horizon losses for the traders.

Pair Trading with Thermon Group and CRA International

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

The idea behind Thermon Group Holdings and CRA International 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 Transformation module to use Price Transformation models to analyze the depth of different equity instruments across global markets.