Correlation Between Thales SA and CPI Aerostructures
Can any of the company-specific risk be diversified away by investing in both Thales SA and CPI Aerostructures 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 CPI Aerostructures 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 CPI Aerostructures, you can compare the effects of market volatilities on Thales SA and CPI Aerostructures 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 CPI Aerostructures. Check out your portfolio center. Please also check ongoing floating volatility patterns of Thales SA and CPI Aerostructures.
Diversification Opportunities for Thales SA and CPI Aerostructures
-0.34 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Thales and CPI is -0.34. Overlapping area represents the amount of risk that can be diversified away by holding Thales SA ADR and CPI Aerostructures in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on CPI Aerostructures 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 CPI Aerostructures. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of CPI Aerostructures has no effect on the direction of Thales SA i.e., Thales SA and CPI Aerostructures go up and down completely randomly.
Pair Corralation between Thales SA and CPI Aerostructures
Assuming the 90 days horizon Thales SA ADR is expected to under-perform the CPI Aerostructures. But the pink sheet apears to be less risky and, when comparing its historical volatility, Thales SA ADR is 2.36 times less risky than CPI Aerostructures. The pink sheet trades about -0.2 of its potential returns per unit of risk. The CPI Aerostructures is currently generating about 0.16 of returns per unit of risk over similar time horizon. If you would invest 333.00 in CPI Aerostructures on September 1, 2024 and sell it today you would earn a total of 48.00 from holding CPI Aerostructures or generate 14.41% 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. CPI Aerostructures
Performance |
| Timeline |
| Thales SA ADR |
| CPI Aerostructures |
Thales SA and CPI Aerostructures Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Thales SA and CPI Aerostructures
The main advantage of trading using opposite Thales SA and CPI Aerostructures positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Thales SA position performs unexpectedly, CPI Aerostructures 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 CPI Aerostructures will offset losses from the drop in CPI Aerostructures' long position.| Thales SA vs. Firan Technology Group | Thales SA vs. 808 Renewable Energy | Thales SA vs. Park Electrochemical | Thales SA vs. Innovative Solutions and |
| CPI Aerostructures vs. Ducommun Incorporated | CPI Aerostructures vs. SIFCO Industries | CPI Aerostructures vs. Innovative Solutions and | CPI Aerostructures vs. Air Industries Group |
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 Options Analysis module to analyze and evaluate options and option chains as a potential hedge for your portfolios.
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