Correlation Between Thermal Energy and CHAR Technologies
Can any of the company-specific risk be diversified away by investing in both Thermal Energy and CHAR Technologies 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 CHAR Technologies 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 CHAR Technologies, you can compare the effects of market volatilities on Thermal Energy and CHAR Technologies 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 CHAR Technologies. Check out your portfolio center. Please also check ongoing floating volatility patterns of Thermal Energy and CHAR Technologies.
Diversification Opportunities for Thermal Energy and CHAR Technologies
0.24 | Correlation Coefficient |
Modest diversification
The 3 months correlation between Thermal and CHAR is 0.24. Overlapping area represents the amount of risk that can be diversified away by holding Thermal Energy International and CHAR Technologies in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on CHAR Technologies 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 CHAR Technologies. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of CHAR Technologies has no effect on the direction of Thermal Energy i.e., Thermal Energy and CHAR Technologies go up and down completely randomly.
Pair Corralation between Thermal Energy and CHAR Technologies
Assuming the 90 days horizon Thermal Energy International is expected to generate 1.15 times more return on investment than CHAR Technologies. However, Thermal Energy is 1.15 times more volatile than CHAR Technologies. It trades about 0.05 of its potential returns per unit of risk. CHAR Technologies is currently generating about -0.01 per unit of risk. If you would invest 12.00 in Thermal Energy International on October 19, 2024 and sell it today you would earn a total of 11.00 from holding Thermal Energy International or generate 91.67% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Thermal Energy International vs. CHAR Technologies
Performance |
| Timeline |
| Thermal Energy Inter |
| CHAR Technologies |
Thermal Energy and CHAR Technologies Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Thermal Energy and CHAR Technologies
The main advantage of trading using opposite Thermal Energy and CHAR Technologies positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Thermal Energy position performs unexpectedly, CHAR Technologies 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 CHAR Technologies will offset losses from the drop in CHAR Technologies' long position.| Thermal Energy vs. Aurora Solar Technologies | Thermal Energy vs. Eguana Technologies | Thermal Energy vs. BioRem Inc | Thermal Energy vs. Current Water Technologies |
| CHAR Technologies vs. BluMetric Environmental | CHAR Technologies vs. Clear Blue Technologies | CHAR Technologies vs. Eguana Technologies | CHAR Technologies vs. Thermal Energy International |
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 Companies Directory module to evaluate performance of over 100,000 Stocks, Funds, and ETFs against different fundamentals.
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