Correlation Between Thermon Group and Mistras

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

Diversification Opportunities for Thermon Group and Mistras

0.27

Correlation Coefficient

Thermon Group  Mistras

Modest diversification

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

Pair Corralation between Thermon Group and Mistras

Considering the 90-day investment horizon Thermon Group is expected to generate 17.91 times less return on investment than Mistras. But when comparing it to its historical volatility, Thermon Group Holdings is 1.1 times less risky than Mistras. It trades about 0.01 of its potential returns per unit of risk. Mistras Group is currently generating about 0.13 of returns per unit of risk over similar time horizon. If you would invest  899.00  in Mistras Group on December 28, 2024 and sell it today you would earn a total of  161.00  from holding Mistras Group or generate 17.91% return on investment over 90 days.

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

Thermon Group Holdings  vs.  Mistras Group

Thermon Group Holdings

Risk-Adjusted Performance

Very Weak

Over the last 90 days Thermon Group Holdings has generated negative risk-adjusted returns adding no value to investors with long positions. 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.

Mistras Group

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Mistras Group are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. Despite nearly inconsistent technical and fundamental indicators, Mistras reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Thermon Group and Mistras

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

The idea behind Thermon Group Holdings and Mistras Group 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 Economic Indicators module to top statistical indicators that provide insights into how an economy is performing.