Correlation Between Thales SA and CAM
Can any of the company-specific risk be diversified away by investing in both Thales SA and CAM 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 Thales SA and CAM into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Thales SA ADR and CAM Group, you can compare the effects of market volatilities on Thales SA and CAM 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 Thales SA with a short position of CAM. Check out your portfolio center. Please also check ongoing floating volatility patterns of Thales SA and CAM.
Diversification Opportunities for Thales SA and CAM
Good diversification
The 3 months correlation between Thales and CAM is -0.13. Overlapping area represents the amount of risk that can be diversified away by holding Thales SA ADR and CAM Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on CAM Group and Thales 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 Thales SA ADR are associated (or correlated) with CAM. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of CAM Group has no effect on the direction of Thales SA i.e., Thales SA and CAM go up and down completely randomly.
Pair Corralation between Thales SA and CAM
Assuming the 90 days horizon Thales SA ADR is expected to under-perform the CAM. But the pink sheet apears to be less risky and, when comparing its historical volatility, Thales SA ADR is 11.86 times less risky than CAM. The pink sheet trades about -0.14 of its potential returns per unit of risk. The CAM Group is currently generating about 0.21 of returns per unit of risk over similar time horizon. If you would invest 3.25 in CAM Group on August 29, 2024 and sell it today you would earn a total of 3.81 from holding CAM Group or generate 117.23% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Thales SA ADR vs. CAM Group
Performance |
| Timeline |
| Thales SA ADR |
| CAM Group |
Thales SA and CAM Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Thales SA and CAM
The main advantage of trading using opposite Thales SA and CAM positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Thales SA position performs unexpectedly, CAM 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 CAM will offset losses from the drop in CAM's long position.| Thales SA vs. MTU Aero Engines | Thales SA vs. Safran SA | Thales SA vs. Leonardo SpA ADR | Thales SA vs. Airbus Group NV |
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 Commodity Channel module to use Commodity Channel Index to analyze current equity momentum.
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