Correlation Between Therma Bright and Sparx Technology
Can any of the company-specific risk be diversified away by investing in both Therma Bright and Sparx Technology 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 Sparx Technology into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Therma Bright and Sparx Technology, you can compare the effects of market volatilities on Therma Bright and Sparx Technology 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 Sparx Technology. Check out your portfolio center. Please also check ongoing floating volatility patterns of Therma Bright and Sparx Technology.
Diversification Opportunities for Therma Bright and Sparx Technology
0.29 | Correlation Coefficient |
Modest diversification
The 3 months correlation between Therma and Sparx is 0.29. Overlapping area represents the amount of risk that can be diversified away by holding Therma Bright and Sparx Technology in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sparx Technology 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 Sparx Technology. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Sparx Technology has no effect on the direction of Therma Bright i.e., Therma Bright and Sparx Technology go up and down completely randomly.
Pair Corralation between Therma Bright and Sparx Technology
Assuming the 90 days trading horizon Therma Bright is expected to generate 3.64 times more return on investment than Sparx Technology. However, Therma Bright is 3.64 times more volatile than Sparx Technology. It trades about 0.11 of its potential returns per unit of risk. Sparx Technology is currently generating about -0.07 per unit of risk. If you would invest 3.50 in Therma Bright on November 6, 2024 and sell it today you would earn a total of 0.50 from holding Therma Bright or generate 14.29% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 86.36% |
| Values | Daily Returns |
Therma Bright vs. Sparx Technology
Performance |
| Timeline |
| Therma Bright |
| Sparx Technology |
Therma Bright and Sparx Technology Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Therma Bright and Sparx Technology
The main advantage of trading using opposite Therma Bright and Sparx Technology positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Therma Bright position performs unexpectedly, Sparx Technology 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 Sparx Technology will offset losses from the drop in Sparx Technology's long position.| Therma Bright vs. Solar Alliance Energy | Therma Bright vs. Braille Energy Systems | Therma Bright vs. MedMira | Therma Bright vs. Lite Access Technologies |
| Sparx Technology vs. Solar Alliance Energy | Sparx Technology vs. Braille Energy Systems | Sparx Technology vs. Lite Access Technologies | Sparx Technology vs. Therma Bright |
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 Balance Of Power module to check stock momentum by analyzing Balance Of Power indicator and other technical ratios.
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