Correlation Between Thermo Fisher and China Holdings

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

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

Diversification Opportunities for Thermo Fisher and China Holdings

0.0

Correlation Coefficient

Thermo Fisher  China Holdings

Pay attention - limited upside

The 3 months correlation between Thermo and China is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding Thermo Fisher Scientific and China Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on China Holdings and Thermo Fisher 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 Thermo Fisher Scientific are associated (or correlated) with China Holdings. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of China Holdings has no effect on the direction of Thermo Fisher i.e., Thermo Fisher and China Holdings go up and down completely randomly.

Pair Corralation between Thermo Fisher and China Holdings

If you would invest  0.02  in China Holdings on September 12, 2024 and sell it today you would earn a total of  0.00  from holding China Holdings or generate 0.0% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Flat
Strength	Insignificant
Accuracy	95.45%
Values	Daily Returns

Thermo Fisher Scientific  vs.  China Holdings

Thermo Fisher Scientific

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Thermo Fisher Scientific has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of weak performance in the last few months, the Stock's primary indicators remain very healthy which may send shares a bit higher in January 2025. The recent disarray may also be a sign of long period up-swing for the firm investors.

China Holdings

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days China Holdings has generated negative risk-adjusted returns adding no value to investors with long positions. Despite quite persistent technical indicators, China Holdings is not utilizing all of its potentials. The latest stock price mess, may contribute to short-term losses for the institutional investors.

Pair Trading with Thermo Fisher and China Holdings

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

The idea behind Thermo Fisher Scientific and China 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.

Check out your portfolio center.

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 Idea Optimizer module to use advanced portfolio builder with pre-computed micro ideas to build optimal portfolio .