Correlation Between GE Aerospace and THK Co
Can any of the company-specific risk be diversified away by investing in both GE Aerospace and THK Co 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 GE Aerospace and THK Co into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between GE Aerospace and THK Co Ltd, you can compare the effects of market volatilities on GE Aerospace and THK Co 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 GE Aerospace with a short position of THK Co. Check out your portfolio center. Please also check ongoing floating volatility patterns of GE Aerospace and THK Co.
Diversification Opportunities for GE Aerospace and THK Co
0.11 | Correlation Coefficient |
Average diversification
The 3 months correlation between GE Aerospace and THK is 0.11. Overlapping area represents the amount of risk that can be diversified away by holding GE Aerospace and THK Co Ltd in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on THK Co and GE Aerospace 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 GE Aerospace are associated (or correlated) with THK Co. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of THK Co has no effect on the direction of GE Aerospace i.e., GE Aerospace and THK Co go up and down completely randomly.
Pair Corralation between GE Aerospace and THK Co
Allowing for the 90-day total investment horizon GE Aerospace is expected to generate 0.9 times more return on investment than THK Co. However, GE Aerospace is 1.11 times less risky than THK Co. It trades about 0.54 of its potential returns per unit of risk. THK Co Ltd is currently generating about 0.17 per unit of risk. If you would invest 16,859 in GE Aerospace on November 2, 2024 and sell it today you would earn a total of 3,698 from holding GE Aerospace or generate 21.93% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 95.0% |
| Values | Daily Returns |
GE Aerospace vs. THK Co Ltd
Performance |
| Timeline |
| GE Aerospace |
| THK Co |
GE Aerospace and THK Co Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with GE Aerospace and THK Co
The main advantage of trading using opposite GE Aerospace and THK Co positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if GE Aerospace position performs unexpectedly, THK Co 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 THK Co will offset losses from the drop in THK Co's long position.| GE Aerospace vs. Illinois Tool Works | GE Aerospace vs. Dover | GE Aerospace vs. Cummins | GE Aerospace vs. Eaton PLC |
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 Portfolio Rebalancing module to analyze risk-adjusted returns against different time horizons to find asset-allocation targets.
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