Correlation Between Supremex and Thermal Energy
Can any of the company-specific risk be diversified away by investing in both Supremex and Thermal Energy 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 Supremex and Thermal Energy into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Supremex and Thermal Energy International, you can compare the effects of market volatilities on Supremex and Thermal Energy 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 Supremex with a short position of Thermal Energy. Check out your portfolio center. Please also check ongoing floating volatility patterns of Supremex and Thermal Energy.
Diversification Opportunities for Supremex and Thermal Energy
-0.19 | Correlation Coefficient |
Good diversification
The 3 months correlation between Supremex and Thermal is -0.19. Overlapping area represents the amount of risk that can be diversified away by holding Supremex and Thermal Energy International in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Thermal Energy Inter and Supremex 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 Supremex are associated (or correlated) with Thermal Energy. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Thermal Energy Inter has no effect on the direction of Supremex i.e., Supremex and Thermal Energy go up and down completely randomly.
Pair Corralation between Supremex and Thermal Energy
Assuming the 90 days trading horizon Supremex is expected to generate 0.59 times more return on investment than Thermal Energy. However, Supremex is 1.7 times less risky than Thermal Energy. It trades about 0.05 of its potential returns per unit of risk. Thermal Energy International is currently generating about -0.01 per unit of risk. If you would invest 364.00 in Supremex on September 2, 2024 and sell it today you would earn a total of 39.00 from holding Supremex or generate 10.71% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Supremex vs. Thermal Energy International
Performance |
| Timeline |
| Supremex |
| Thermal Energy Inter |
Supremex and Thermal Energy Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Supremex and Thermal Energy
The main advantage of trading using opposite Supremex and Thermal Energy positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Supremex position performs unexpectedly, Thermal Energy 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 Thermal Energy will offset losses from the drop in Thermal Energy's long position.| Supremex vs. K Bro Linen | Supremex vs. The Keg Royalties | Supremex vs. Pollard Banknote Limited | Supremex vs. SIR Royalty Income |
| Thermal Energy vs. Firan Technology Group | Thermal Energy vs. Baylin Technologies | Thermal Energy vs. iShares Canadian HYBrid | Thermal Energy vs. Altagas Cum Red |
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 Center module to all portfolio management and optimization tools to improve performance of your portfolios.
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