Correlation Between Therma Bright and Premium Brands
Can any of the company-specific risk be diversified away by investing in both Therma Bright and Premium Brands 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 Therma Bright and Premium Brands into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Therma Bright and Premium Brands Holdings, you can compare the effects of market volatilities on Therma Bright and Premium Brands 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 Therma Bright with a short position of Premium Brands. Check out your portfolio center. Please also check ongoing floating volatility patterns of Therma Bright and Premium Brands.
Diversification Opportunities for Therma Bright and Premium Brands
0.76 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Therma and Premium is 0.76. Overlapping area represents the amount of risk that can be diversified away by holding Therma Bright and Premium Brands Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Premium Brands Holdings and Therma Bright 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 Therma Bright are associated (or correlated) with Premium Brands. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Premium Brands Holdings has no effect on the direction of Therma Bright i.e., Therma Bright and Premium Brands go up and down completely randomly.
Pair Corralation between Therma Bright and Premium Brands
Assuming the 90 days trading horizon Therma Bright is expected to generate 11.98 times more return on investment than Premium Brands. However, Therma Bright is 11.98 times more volatile than Premium Brands Holdings. It trades about 0.04 of its potential returns per unit of risk. Premium Brands Holdings is currently generating about 0.01 per unit of risk. If you would invest 6.00 in Therma Bright on September 12, 2024 and sell it today you would lose (4.00) from holding Therma Bright or give up 66.67% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Therma Bright vs. Premium Brands Holdings
Performance |
| Timeline |
| Therma Bright |
| Premium Brands Holdings |
Therma Bright and Premium Brands Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Therma Bright and Premium Brands
The main advantage of trading using opposite Therma Bright and Premium Brands positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Therma Bright position performs unexpectedly, Premium Brands 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 Premium Brands will offset losses from the drop in Premium Brands' long position.| Therma Bright vs. Solar Alliance Energy | Therma Bright vs. Braille Energy Systems | Therma Bright vs. MedMira | Therma Bright vs. Lite Access Technologies |
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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 Stock Tickers module to use high-impact, comprehensive, and customizable stock tickers that can be easily integrated to any websites.
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