Correlation Between Therma Bright and Datametrex

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

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

Diversification Opportunities for Therma Bright and Datametrex

0.54

Correlation Coefficient

Therma Bright  Datametrex

Very weak diversification

The 3 months correlation between Therma and Datametrex is 0.54. Overlapping area represents the amount of risk that can be diversified away by holding Therma Bright and Datametrex AI in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Datametrex AI and Therma Bright 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 Therma Bright are associated (or correlated) with Datametrex. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Datametrex AI has no effect on the direction of Therma Bright i.e., Therma Bright and Datametrex go up and down completely randomly.

Pair Corralation between Therma Bright and Datametrex

Assuming the 90 days trading horizon Therma Bright is expected to generate 2.33 times less return on investment than Datametrex. But when comparing it to its historical volatility, Therma Bright is 2.12 times less risky than Datametrex. It trades about 0.05 of its potential returns per unit of risk. Datametrex AI is currently generating about 0.06 of returns per unit of risk over similar time horizon. If you would invest  15.00  in Datametrex AI on December 30, 2024 and sell it today you would lose (7.00) from holding Datametrex AI or give up 46.67% of portfolio value over 90 days.

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

Therma Bright  vs.  Datametrex AI

Therma Bright

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Therma Bright are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. In spite of fairly abnormal basic indicators, Therma Bright showed solid returns over the last few months and may actually be approaching a breakup point.

Datametrex AI

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Datametrex AI are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. In spite of fairly weak basic indicators, Datametrex showed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Therma Bright and Datametrex

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

The idea behind Therma Bright and Datametrex AI 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.

Check out your portfolio center.

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 Global Markets Map module to get a quick overview of global market snapshot using zoomable world map. Drill down to check world indexes.