Correlation Between Thermon Group and Helios Technologies

Can any of the company-specific risk be diversified away by investing in both Thermon Group and Helios Technologies 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 Helios Technologies 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 Helios Technologies, you can compare the effects of market volatilities on Thermon Group and Helios Technologies 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 Helios Technologies. Check out your portfolio center. Please also check ongoing floating volatility patterns of Thermon Group and Helios Technologies.

Diversification Opportunities for Thermon Group and Helios Technologies

0.69

Correlation Coefficient

Thermon Group  Helios Technologies

Poor diversification

The 3 months correlation between Thermon and Helios is 0.69. Overlapping area represents the amount of risk that can be diversified away by holding Thermon Group Holdings and Helios Technologies in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Helios Technologies 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 Helios Technologies. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Helios Technologies has no effect on the direction of Thermon Group i.e., Thermon Group and Helios Technologies go up and down completely randomly.

Pair Corralation between Thermon Group and Helios Technologies

Considering the 90-day investment horizon Thermon Group Holdings is expected to generate 0.91 times more return on investment than Helios Technologies. However, Thermon Group Holdings is 1.1 times less risky than Helios Technologies. It trades about -0.28 of its potential returns per unit of risk. Helios Technologies is currently generating about -0.49 per unit of risk. If you would invest  3,205  in Thermon Group Holdings on October 6, 2024 and sell it today you would lose (274.00) from holding Thermon Group Holdings or give up 8.55% of portfolio value over 90 days.

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

Thermon Group Holdings  vs.  Helios Technologies

Thermon Group Holdings

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Thermon Group Holdings are ranked lower than 2 (%) 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.

Helios Technologies

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Helios Technologies has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of very healthy forward indicators, Helios Technologies is not utilizing all of its potentials. The recent stock price disarray, may contribute to short-term losses for the investors.

Pair Trading with Thermon Group and Helios Technologies

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

The idea behind Thermon Group Holdings and Helios Technologies 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 Sign In To Macroaxis module to sign in to explore Macroaxis' wealth optimization platform and fintech modules.