Correlation Between Thyssenkrupp and Worthington Industries

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

By analyzing existing cross correlation between Thyssenkrupp AG ADR and Worthington Industries, you can compare the effects of market volatilities on Thyssenkrupp and Worthington Industries 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 Thyssenkrupp with a short position of Worthington Industries. Check out your portfolio center. Please also check ongoing floating volatility patterns of Thyssenkrupp and Worthington Industries.

Diversification Opportunities for Thyssenkrupp and Worthington Industries

0.02

Correlation Coefficient

Thyssenkrupp  Worthington Industries

Significant diversification

The 3 months correlation between Thyssenkrupp and Worthington is 0.02. Overlapping area represents the amount of risk that can be diversified away by holding Thyssenkrupp AG ADR and Worthington Industries in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Worthington Industries and Thyssenkrupp 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 Thyssenkrupp AG ADR are associated (or correlated) with Worthington Industries. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Worthington Industries has no effect on the direction of Thyssenkrupp i.e., Thyssenkrupp and Worthington Industries go up and down completely randomly.

Pair Corralation between Thyssenkrupp and Worthington Industries

Assuming the 90 days horizon Thyssenkrupp AG ADR is expected to generate 1.36 times more return on investment than Worthington Industries. However, Thyssenkrupp is 1.36 times more volatile than Worthington Industries. It trades about 0.05 of its potential returns per unit of risk. Worthington Industries is currently generating about 0.03 per unit of risk. If you would invest  375.00  in Thyssenkrupp AG ADR on September 26, 2024 and sell it today you would earn a total of  30.00  from holding Thyssenkrupp AG ADR or generate 8.0% return on investment over 90 days.

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

Thyssenkrupp AG ADR  vs.  Worthington Industries

Thyssenkrupp AG ADR

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Thyssenkrupp AG ADR are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. In spite of fairly weak primary indicators, Thyssenkrupp may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Worthington Industries

Risk-Adjusted Performance

2 of 100

Very Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Worthington Industries are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. Even with relatively invariable basic indicators, Worthington Industries is not utilizing all of its potentials. The recent stock price agitation, may contribute to short-term losses for the retail investors.

Pair Trading with Thyssenkrupp and Worthington Industries

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

The idea behind Thyssenkrupp AG ADR and Worthington Industries 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 Price Ceiling Movement module to calculate and plot Price Ceiling Movement for different equity instruments.