Correlation Between Stef SA and Thermador Groupe
Can any of the company-specific risk be diversified away by investing in both Stef SA and Thermador Groupe 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 Stef SA and Thermador Groupe into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Stef SA and Thermador Groupe SA, you can compare the effects of market volatilities on Stef SA and Thermador Groupe 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 Stef SA with a short position of Thermador Groupe. Check out your portfolio center. Please also check ongoing floating volatility patterns of Stef SA and Thermador Groupe.
Diversification Opportunities for Stef SA and Thermador Groupe
0.66 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Stef and Thermador is 0.66. Overlapping area represents the amount of risk that can be diversified away by holding Stef SA and Thermador Groupe SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Thermador Groupe and Stef SA 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 Stef SA are associated (or correlated) with Thermador Groupe. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Thermador Groupe has no effect on the direction of Stef SA i.e., Stef SA and Thermador Groupe go up and down completely randomly.
Pair Corralation between Stef SA and Thermador Groupe
Assuming the 90 days trading horizon Stef SA is expected to generate 0.5 times more return on investment than Thermador Groupe. However, Stef SA is 2.0 times less risky than Thermador Groupe. It trades about -0.06 of its potential returns per unit of risk. Thermador Groupe SA is currently generating about -0.08 per unit of risk. If you would invest 13,280 in Stef SA on August 24, 2024 and sell it today you would lose (180.00) from holding Stef SA or give up 1.36% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Stef SA vs. Thermador Groupe SA
Performance |
| Timeline |
| Stef SA |
| Thermador Groupe |
Stef SA and Thermador Groupe Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Stef SA and Thermador Groupe
The main advantage of trading using opposite Stef SA and Thermador Groupe positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Stef SA position performs unexpectedly, Thermador Groupe 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 Thermador Groupe will offset losses from the drop in Thermador Groupe's long position.The idea behind Stef SA and Thermador Groupe SA 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.| Thermador Groupe vs. Stef SA | Thermador Groupe vs. Robertet SA | Thermador Groupe vs. Grard Perrier Industrie | Thermador Groupe vs. Aubay Socit Anonyme |
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 Pair Correlation module to compare performance and examine fundamental relationship between any two equity instruments.
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