Correlation Between Thule Group and MIPS AB

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

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

Diversification Opportunities for Thule Group and MIPS AB

-0.67

Correlation Coefficient

Thule Group  MIPS AB

Excellent diversification

The 3 months correlation between Thule and MIPS is -0.67. Overlapping area represents the amount of risk that can be diversified away by holding Thule Group AB and MIPS AB in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on MIPS AB and Thule 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 Thule Group AB are associated (or correlated) with MIPS AB. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of MIPS AB has no effect on the direction of Thule Group i.e., Thule Group and MIPS AB go up and down completely randomly.

Pair Corralation between Thule Group and MIPS AB

Assuming the 90 days trading horizon Thule Group AB is expected to generate 1.08 times more return on investment than MIPS AB. However, Thule Group is 1.08 times more volatile than MIPS AB. It trades about 0.1 of its potential returns per unit of risk. MIPS AB is currently generating about -0.07 per unit of risk. If you would invest  29,810  in Thule Group AB on August 31, 2024 and sell it today you would earn a total of  4,890  from holding Thule Group AB or generate 16.4% return on investment over 90 days.

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

Thule Group AB  vs.  MIPS AB

Thule Group AB

Risk-Adjusted Performance

7 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Thule Group AB are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain basic indicators, Thule Group unveiled solid returns over the last few months and may actually be approaching a breakup point.

MIPS AB

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days MIPS AB has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest uncertain performance, the Stock's basic indicators remain stable and the newest uproar on Wall Street may also be a sign of mid-term gains for the firm private investors.

Pair Trading with Thule Group and MIPS AB

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

The idea behind Thule Group AB and MIPS AB 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 Portfolio Volatility module to check portfolio volatility and analyze historical return density to properly model market risk.