Correlation Between Summit Materials and Thunder Power
Can any of the company-specific risk be diversified away by investing in both Summit Materials and Thunder Power 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 Summit Materials and Thunder Power into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Summit Materials and Thunder Power Holdings,, you can compare the effects of market volatilities on Summit Materials and Thunder Power 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 Summit Materials with a short position of Thunder Power. Check out your portfolio center. Please also check ongoing floating volatility patterns of Summit Materials and Thunder Power.
Diversification Opportunities for Summit Materials and Thunder Power
-0.77 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between Summit and Thunder is -0.77. Overlapping area represents the amount of risk that can be diversified away by holding Summit Materials and Thunder Power Holdings, in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Thunder Power Holdings, and Summit Materials 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 Summit Materials are associated (or correlated) with Thunder Power. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Thunder Power Holdings, has no effect on the direction of Summit Materials i.e., Summit Materials and Thunder Power go up and down completely randomly.
Pair Corralation between Summit Materials and Thunder Power
Considering the 90-day investment horizon Summit Materials is expected to generate 10.39 times less return on investment than Thunder Power. But when comparing it to its historical volatility, Summit Materials is 8.66 times less risky than Thunder Power. It trades about 0.14 of its potential returns per unit of risk. Thunder Power Holdings, is currently generating about 0.17 of returns per unit of risk over similar time horizon. If you would invest 31.00 in Thunder Power Holdings, on September 2, 2024 and sell it today you would earn a total of 16.00 from holding Thunder Power Holdings, or generate 51.61% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Summit Materials vs. Thunder Power Holdings,
Performance |
| Timeline |
| Summit Materials |
| Thunder Power Holdings, |
Summit Materials and Thunder Power Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Summit Materials and Thunder Power
The main advantage of trading using opposite Summit Materials and Thunder Power positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Summit Materials position performs unexpectedly, Thunder Power 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 Thunder Power will offset losses from the drop in Thunder Power's long position.| Summit Materials vs. Martin Marietta Materials | Summit Materials vs. Vulcan Materials | Summit Materials vs. James Hardie Industries | Summit Materials vs. Eagle Materials |
| Thunder Power vs. Mativ Holdings | Thunder Power vs. Summit Materials | Thunder Power vs. Sensient Technologies | Thunder Power vs. Lion One Metals |
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 Price Ceiling Movement module to calculate and plot Price Ceiling Movement for different equity instruments.
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