Correlation Between SPORT LISBOA and Thermo Fisher

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Can any of the company-specific risk be diversified away by investing in both SPORT LISBOA and Thermo Fisher 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 SPORT LISBOA and Thermo Fisher into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between SPORT LISBOA E and Thermo Fisher Scientific, you can compare the effects of market volatilities on SPORT LISBOA and Thermo Fisher 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 SPORT LISBOA with a short position of Thermo Fisher. Check out your portfolio center. Please also check ongoing floating volatility patterns of SPORT LISBOA and Thermo Fisher.

Diversification Opportunities for SPORT LISBOA and Thermo Fisher

0.44
  Correlation Coefficient

Very weak diversification

The 3 months correlation between SPORT and Thermo is 0.44. Overlapping area represents the amount of risk that can be diversified away by holding SPORT LISBOA E and Thermo Fisher Scientific in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Thermo Fisher Scientific and SPORT LISBOA 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 SPORT LISBOA E are associated (or correlated) with Thermo Fisher. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Thermo Fisher Scientific has no effect on the direction of SPORT LISBOA i.e., SPORT LISBOA and Thermo Fisher go up and down completely randomly.

Pair Corralation between SPORT LISBOA and Thermo Fisher

Assuming the 90 days horizon SPORT LISBOA E is expected to under-perform the Thermo Fisher. In addition to that, SPORT LISBOA is 1.92 times more volatile than Thermo Fisher Scientific. It trades about -0.04 of its total potential returns per unit of risk. Thermo Fisher Scientific is currently generating about 0.14 per unit of volatility. If you would invest  50,981  in Thermo Fisher Scientific on October 12, 2024 and sell it today you would earn a total of  1,709  from holding Thermo Fisher Scientific or generate 3.35% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthWeak
Accuracy100.0%
ValuesDaily Returns

SPORT LISBOA E  vs.  Thermo Fisher Scientific

 Performance 
       Timeline  
SPORT LISBOA E 

Risk-Adjusted Performance

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Weak
 
Strong
Very Weak
Over the last 90 days SPORT LISBOA E has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest uncertain performance, the Stock's basic indicators remain stable and the current disturbance on Wall Street may also be a sign of long-run gains for the company stockholders.
Thermo Fisher Scientific 

Risk-Adjusted Performance

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Weak
 
Strong
Very Weak
Over the last 90 days Thermo Fisher Scientific has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable basic indicators, Thermo Fisher is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

SPORT LISBOA and Thermo Fisher Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with SPORT LISBOA and Thermo Fisher

The main advantage of trading using opposite SPORT LISBOA and Thermo Fisher positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if SPORT LISBOA position performs unexpectedly, Thermo Fisher 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 Thermo Fisher will offset losses from the drop in Thermo Fisher's long position.
The idea behind SPORT LISBOA E and Thermo Fisher Scientific 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 Transformation module to use Price Transformation models to analyze the depth of different equity instruments across global markets.

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