Correlation Between Vishay Precision and Thermon Group

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

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

Diversification Opportunities for Vishay Precision and Thermon Group

-0.21

Correlation Coefficient

Vishay Precision  Thermon Group

Very good diversification

The 3 months correlation between Vishay and Thermon is -0.21. Overlapping area represents the amount of risk that can be diversified away by holding Vishay Precision Group and Thermon Group Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Thermon Group Holdings and Vishay Precision 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 Vishay Precision Group are associated (or correlated) with Thermon Group. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Thermon Group Holdings has no effect on the direction of Vishay Precision i.e., Vishay Precision and Thermon Group go up and down completely randomly.

Pair Corralation between Vishay Precision and Thermon Group

Considering the 90-day investment horizon Vishay Precision is expected to generate 7.25 times less return on investment than Thermon Group. In addition to that, Vishay Precision is 1.11 times more volatile than Thermon Group Holdings. It trades about 0.01 of its total potential returns per unit of risk. Thermon Group Holdings is currently generating about 0.11 per unit of volatility. If you would invest  2,813  in Thermon Group Holdings on September 12, 2024 and sell it today you would earn a total of  379.00  from holding Thermon Group Holdings or generate 13.47% return on investment over 90 days.

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

Vishay Precision Group  vs.  Thermon Group Holdings

Vishay Precision

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Vishay Precision Group are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. Despite nearly stable basic indicators, Vishay Precision is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

Thermon Group Holdings

Risk-Adjusted Performance

8 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Thermon Group Holdings are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. Even with relatively unsteady technical indicators, Thermon Group reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Vishay Precision and Thermon Group

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

The idea behind Vishay Precision Group and Thermon Group Holdings 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 Portfolio Anywhere module to track or share privately all of your investments from the convenience of any device.