Correlation Between Thermador Groupe and Carbios

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

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

Diversification Opportunities for Thermador Groupe and Carbios

0.87

Correlation Coefficient

Thermador Groupe  Carbios

Very poor diversification

The 3 months correlation between Thermador and Carbios is 0.87. Overlapping area represents the amount of risk that can be diversified away by holding Thermador Groupe SA and Carbios in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Carbios and Thermador Groupe 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 Thermador Groupe SA are associated (or correlated) with Carbios. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Carbios has no effect on the direction of Thermador Groupe i.e., Thermador Groupe and Carbios go up and down completely randomly.

Pair Corralation between Thermador Groupe and Carbios

Assuming the 90 days trading horizon Thermador Groupe SA is expected to generate 0.26 times more return on investment than Carbios. However, Thermador Groupe SA is 3.87 times less risky than Carbios. It trades about -0.06 of its potential returns per unit of risk. Carbios is currently generating about -0.18 per unit of risk. If you would invest  7,600  in Thermador Groupe SA on September 12, 2024 and sell it today you would lose (510.00) from holding Thermador Groupe SA or give up 6.71% of portfolio value over 90 days.

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

Thermador Groupe SA  vs.  Carbios

Thermador Groupe

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Thermador Groupe SA has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong basic indicators, Thermador Groupe is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Carbios

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Carbios has generated negative risk-adjusted returns adding no value to investors with long positions. Even with weak performance in the last few months, the Stock's basic indicators remain relatively invariable which may send shares a bit higher in January 2025. The latest agitation may also be a sign of long-running up-swing for the enterprise retail investors.

Pair Trading with Thermador Groupe and Carbios

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

The idea behind Thermador Groupe SA and Carbios 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 Diagnostics module to use generated alerts and portfolio events aggregator to diagnose current holdings.