Correlation Between Park Electrochemical and Thales SA
Can any of the company-specific risk be diversified away by investing in both Park Electrochemical and Thales SA 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 Park Electrochemical and Thales SA into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Park Electrochemical and Thales SA ADR, you can compare the effects of market volatilities on Park Electrochemical and Thales SA 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 Park Electrochemical with a short position of Thales SA. Check out your portfolio center. Please also check ongoing floating volatility patterns of Park Electrochemical and Thales SA.
Diversification Opportunities for Park Electrochemical and Thales SA
-0.1 | Correlation Coefficient |
Good diversification
The 3 months correlation between Park and Thales is -0.1. Overlapping area represents the amount of risk that can be diversified away by holding Park Electrochemical and Thales SA ADR in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Thales SA ADR and Park Electrochemical 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 Park Electrochemical are associated (or correlated) with Thales SA. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Thales SA ADR has no effect on the direction of Park Electrochemical i.e., Park Electrochemical and Thales SA go up and down completely randomly.
Pair Corralation between Park Electrochemical and Thales SA
Considering the 90-day investment horizon Park Electrochemical is expected to generate 1.11 times more return on investment than Thales SA. However, Park Electrochemical is 1.11 times more volatile than Thales SA ADR. It trades about 0.19 of its potential returns per unit of risk. Thales SA ADR is currently generating about -0.23 per unit of risk. If you would invest 1,397 in Park Electrochemical on August 31, 2024 and sell it today you would earn a total of 128.00 from holding Park Electrochemical or generate 9.16% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Park Electrochemical vs. Thales SA ADR
Performance |
| Timeline |
| Park Electrochemical |
| Thales SA ADR |
Park Electrochemical and Thales SA Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Park Electrochemical and Thales SA
The main advantage of trading using opposite Park Electrochemical and Thales SA positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Park Electrochemical position performs unexpectedly, Thales SA 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 Thales SA will offset losses from the drop in Thales SA's long position.| Park Electrochemical vs. Innovative Solutions and | Park Electrochemical vs. VSE Corporation | Park Electrochemical vs. Curtiss Wright | Park Electrochemical vs. Ducommun Incorporated |
| Thales SA vs. Firan Technology Group | Thales SA vs. 808 Renewable Energy | Thales SA vs. Park Electrochemical | Thales SA vs. Innovative Solutions and |
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 Breakdown module to analyze constituents of all Macroaxis ideas. Macroaxis investment ideas are predefined, sector-focused investing themes.
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