Correlation Between Thermal Energy and Hammond Manufacturing
Can any of the company-specific risk be diversified away by investing in both Thermal Energy and Hammond Manufacturing 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 Thermal Energy and Hammond Manufacturing into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Thermal Energy International and Hammond Manufacturing, you can compare the effects of market volatilities on Thermal Energy and Hammond Manufacturing 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 Thermal Energy with a short position of Hammond Manufacturing. Check out your portfolio center. Please also check ongoing floating volatility patterns of Thermal Energy and Hammond Manufacturing.
Diversification Opportunities for Thermal Energy and Hammond Manufacturing
-0.73 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between Thermal and Hammond is -0.73. Overlapping area represents the amount of risk that can be diversified away by holding Thermal Energy International and Hammond Manufacturing in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Hammond Manufacturing and Thermal Energy 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 Thermal Energy International are associated (or correlated) with Hammond Manufacturing. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Hammond Manufacturing has no effect on the direction of Thermal Energy i.e., Thermal Energy and Hammond Manufacturing go up and down completely randomly.
Pair Corralation between Thermal Energy and Hammond Manufacturing
Assuming the 90 days horizon Thermal Energy International is expected to under-perform the Hammond Manufacturing. In addition to that, Thermal Energy is 1.95 times more volatile than Hammond Manufacturing. It trades about -0.02 of its total potential returns per unit of risk. Hammond Manufacturing is currently generating about 0.03 per unit of volatility. If you would invest 1,001 in Hammond Manufacturing on September 3, 2024 and sell it today you would earn a total of 40.00 from holding Hammond Manufacturing or generate 4.0% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Thermal Energy International vs. Hammond Manufacturing
Performance |
| Timeline |
| Thermal Energy Inter |
| Hammond Manufacturing |
Thermal Energy and Hammond Manufacturing Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Thermal Energy and Hammond Manufacturing
The main advantage of trading using opposite Thermal Energy and Hammond Manufacturing positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Thermal Energy position performs unexpectedly, Hammond Manufacturing 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 Hammond Manufacturing will offset losses from the drop in Hammond Manufacturing's long position.| Thermal Energy vs. Environmental Waste International | Thermal Energy vs. Aurora Solar Technologies | Thermal Energy vs. Eguana Technologies | Thermal Energy vs. BioRem Inc |
| Hammond Manufacturing vs. Hammond Power Solutions | Hammond Manufacturing vs. ADF Group | Hammond Manufacturing vs. Goodfellow | Hammond Manufacturing vs. Melcor Developments |
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 Share Portfolio module to track or share privately all of your investments from the convenience of any device.
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