Correlation Between Thermador Groupe and Neurones

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

Diversification Opportunities for Thermador Groupe and Neurones

-0.66

Correlation Coefficient

Thermador Groupe  Neurones

Excellent diversification

The 3 months correlation between Thermador and Neurones is -0.66. Overlapping area represents the amount of risk that can be diversified away by holding Thermador Groupe SA and Neurones in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Neurones 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 Neurones. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Neurones has no effect on the direction of Thermador Groupe i.e., Thermador Groupe and Neurones go up and down completely randomly.

Pair Corralation between Thermador Groupe and Neurones

Assuming the 90 days trading horizon Thermador Groupe SA is expected to generate 1.72 times more return on investment than Neurones. However, Thermador Groupe is 1.72 times more volatile than Neurones. It trades about -0.06 of its potential returns per unit of risk. Neurones is currently generating about -0.15 per unit of risk. If you would invest  7,140  in Thermador Groupe SA on September 1, 2024 and sell it today you would lose (190.00) from holding Thermador Groupe SA or give up 2.66% of portfolio value over 90 days.

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

Thermador Groupe SA  vs.  Neurones

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 latest weak performance, the Stock's basic indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for the company investors.

Neurones

Risk-Adjusted Performance

6 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Neurones are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. Despite somewhat strong basic indicators, Neurones is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Thermador Groupe and Neurones

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

The idea behind Thermador Groupe SA and Neurones 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 Fundamentals Comparison module to compare fundamentals across multiple equities to find investing opportunities.