Correlation Between Thermaltake Technology and Emerging Display
Can any of the company-specific risk be diversified away by investing in both Thermaltake Technology and Emerging Display 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 Thermaltake Technology and Emerging Display into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Thermaltake Technology Co and Emerging Display Technologies, you can compare the effects of market volatilities on Thermaltake Technology and Emerging Display 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 Thermaltake Technology with a short position of Emerging Display. Check out your portfolio center. Please also check ongoing floating volatility patterns of Thermaltake Technology and Emerging Display.
Diversification Opportunities for Thermaltake Technology and Emerging Display
0.31 | Correlation Coefficient |
Weak diversification
The 3 months correlation between Thermaltake and Emerging is 0.31. Overlapping area represents the amount of risk that can be diversified away by holding Thermaltake Technology Co and Emerging Display Technologies in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Emerging Display Tec and Thermaltake Technology 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 Thermaltake Technology Co are associated (or correlated) with Emerging Display. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Emerging Display Tec has no effect on the direction of Thermaltake Technology i.e., Thermaltake Technology and Emerging Display go up and down completely randomly.
Pair Corralation between Thermaltake Technology and Emerging Display
Assuming the 90 days trading horizon Thermaltake Technology Co is expected to generate 1.46 times more return on investment than Emerging Display. However, Thermaltake Technology is 1.46 times more volatile than Emerging Display Technologies. It trades about 0.03 of its potential returns per unit of risk. Emerging Display Technologies is currently generating about 0.03 per unit of risk. If you would invest 2,788 in Thermaltake Technology Co on September 3, 2024 and sell it today you would earn a total of 862.00 from holding Thermaltake Technology Co or generate 30.92% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Thermaltake Technology Co vs. Emerging Display Technologies
Performance |
| Timeline |
| Thermaltake Technology |
| Emerging Display Tec |
Thermaltake Technology and Emerging Display Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Thermaltake Technology and Emerging Display
The main advantage of trading using opposite Thermaltake Technology and Emerging Display positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Thermaltake Technology position performs unexpectedly, Emerging Display 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 Emerging Display will offset losses from the drop in Emerging Display's long position.The idea behind Thermaltake Technology Co and Emerging Display Technologies 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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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 Instant Ratings module to determine any equity ratings based on digital recommendations. Macroaxis instant equity ratings are based on combination of fundamental analysis and risk-adjusted market performance.
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