Correlation Between Thermon Group and Standex International

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

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

Diversification Opportunities for Thermon Group and Standex International

0.49

Correlation Coefficient

Thermon Group  Standex International

Very weak diversification

The 3 months correlation between Thermon and Standex is 0.49. Overlapping area represents the amount of risk that can be diversified away by holding Thermon Group Holdings and Standex International in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Standex International and Thermon 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 Thermon Group Holdings are associated (or correlated) with Standex International. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Standex International has no effect on the direction of Thermon Group i.e., Thermon Group and Standex International go up and down completely randomly.

Pair Corralation between Thermon Group and Standex International

Considering the 90-day investment horizon Thermon Group is expected to generate 2.09 times less return on investment than Standex International. But when comparing it to its historical volatility, Thermon Group Holdings is 1.03 times less risky than Standex International. It trades about 0.08 of its potential returns per unit of risk. Standex International is currently generating about 0.16 of returns per unit of risk over similar time horizon. If you would invest  17,057  in Standex International on August 31, 2024 and sell it today you would earn a total of  3,699  from holding Standex International or generate 21.69% return on investment over 90 days.

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

Thermon Group Holdings  vs.  Standex International

Thermon Group Holdings

Risk-Adjusted Performance

6 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Thermon Group Holdings are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. Even with relatively unsteady technical indicators, Thermon Group may actually be approaching a critical reversion point that can send shares even higher in December 2024.

Standex International

Risk-Adjusted Performance

12 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Standex International are ranked lower than 12 (%) of all global equities and portfolios over the last 90 days. Despite fairly unsteady basic indicators, Standex International demonstrated solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Thermon Group and Standex International

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

The idea behind Thermon Group Holdings and Standex International 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.