Correlation Between Thule Group and USWE Sports

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

Diversification Opportunities for Thule Group and USWE Sports

0.77

Correlation Coefficient

Thule Group  USWE Sports

Poor diversification

The 3 months correlation between Thule and USWE is 0.77. Overlapping area represents the amount of risk that can be diversified away by holding Thule Group AB and USWE Sports AB in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on USWE Sports 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 USWE Sports. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of USWE Sports AB has no effect on the direction of Thule Group i.e., Thule Group and USWE Sports go up and down completely randomly.

Pair Corralation between Thule Group and USWE Sports

Assuming the 90 days trading horizon Thule Group AB is expected to under-perform the USWE Sports. In addition to that, Thule Group is 1.13 times more volatile than USWE Sports AB. It trades about -0.06 of its total potential returns per unit of risk. USWE Sports AB is currently generating about 0.14 per unit of volatility. If you would invest  865.00  in USWE Sports AB on September 1, 2024 and sell it today you would earn a total of  55.00  from holding USWE Sports AB or generate 6.36% return on investment over 90 days.

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

Thule Group AB  vs.  USWE Sports 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.

USWE Sports AB

Risk-Adjusted Performance

11 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in USWE Sports AB are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain basic indicators, USWE Sports unveiled solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Thule Group and USWE Sports

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

The idea behind Thule Group AB and USWE Sports 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.

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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 Financial Widgets module to easily integrated Macroaxis content with over 30 different plug-and-play financial widgets.