Correlation Between Thales SA and Graines Voltz

Can any of the company-specific risk be diversified away by investing in both Thales SA and Graines Voltz 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 Graines Voltz into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Thales SA and Graines Voltz SA, you can compare the effects of market volatilities on Thales SA and Graines Voltz 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 Graines Voltz. Check out your portfolio center. Please also check ongoing floating volatility patterns of Thales SA and Graines Voltz.

Diversification Opportunities for Thales SA and Graines Voltz

-0.85

Correlation Coefficient

Thales SA  Graines Voltz

Pay attention - limited upside

The 3 months correlation between Thales and Graines is -0.85. Overlapping area represents the amount of risk that can be diversified away by holding Thales SA and Graines Voltz SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Graines Voltz SA 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 are associated (or correlated) with Graines Voltz. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Graines Voltz SA has no effect on the direction of Thales SA i.e., Thales SA and Graines Voltz go up and down completely randomly.

Pair Corralation between Thales SA and Graines Voltz

Assuming the 90 days horizon Thales SA is expected to under-perform the Graines Voltz. But the stock apears to be less risky and, when comparing its historical volatility, Thales SA is 1.74 times less risky than Graines Voltz. The stock trades about -0.01 of its potential returns per unit of risk. The Graines Voltz SA is currently generating about 0.02 of returns per unit of risk over similar time horizon. If you would invest  2,330  in Graines Voltz SA on February 3, 2024 and sell it today you would earn a total of  10.00  from holding Graines Voltz SA or generate 0.43% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Significant
Accuracy	100.0%
Values	Daily Returns

Thales SA  vs.  Graines Voltz SA

Thales SA

Risk-Adjusted Performance

11 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Thales SA are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Thales SA sustained solid returns over the last few months and may actually be approaching a breakup point.

Graines Voltz SA

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Graines Voltz SA has generated negative risk-adjusted returns adding no value to investors with long positions. Despite weak performance in the last few months, the Stock's basic indicators remain somewhat strong which may send shares a bit higher in June 2024. The current disturbance may also be a sign of long term up-swing for the company investors.

Pair Trading with Thales SA and Graines Voltz

The main advantage of trading using opposite Thales SA and Graines Voltz positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Thales SA position performs unexpectedly, Graines Voltz 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 Graines Voltz will offset losses from the drop in Graines Voltz's long position.

The idea behind Thales SA and Graines Voltz SA pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.

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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 Portfolio Optimization module to compute new portfolio that will generate highest expected return given your specified tolerance for risk.