Correlation Between Knowles and THAI BEVERAGE
Can any of the company-specific risk be diversified away by investing in both Knowles and THAI BEVERAGE 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 Knowles and THAI BEVERAGE into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Knowles and THAI BEVERAGE, you can compare the effects of market volatilities on Knowles and THAI BEVERAGE 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 Knowles with a short position of THAI BEVERAGE. Check out your portfolio center. Please also check ongoing floating volatility patterns of Knowles and THAI BEVERAGE.
Diversification Opportunities for Knowles and THAI BEVERAGE
0.41 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Knowles and THAI is 0.41. Overlapping area represents the amount of risk that can be diversified away by holding Knowles and THAI BEVERAGE in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on THAI BEVERAGE and Knowles 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 Knowles are associated (or correlated) with THAI BEVERAGE. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of THAI BEVERAGE has no effect on the direction of Knowles i.e., Knowles and THAI BEVERAGE go up and down completely randomly.
Pair Corralation between Knowles and THAI BEVERAGE
Assuming the 90 days horizon Knowles is expected to generate 1.01 times more return on investment than THAI BEVERAGE. However, Knowles is 1.01 times more volatile than THAI BEVERAGE. It trades about 0.31 of its potential returns per unit of risk. THAI BEVERAGE is currently generating about 0.22 per unit of risk. If you would invest 1,600 in Knowles on September 4, 2024 and sell it today you would earn a total of 260.00 from holding Knowles or generate 16.25% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 95.45% |
| Values | Daily Returns |
Knowles vs. THAI BEVERAGE
Performance |
| Timeline |
| Knowles |
| THAI BEVERAGE |
Knowles and THAI BEVERAGE Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Knowles and THAI BEVERAGE
The main advantage of trading using opposite Knowles and THAI BEVERAGE positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Knowles position performs unexpectedly, THAI BEVERAGE 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 THAI BEVERAGE will offset losses from the drop in THAI BEVERAGE's long position.| Knowles vs. Tyson Foods | Knowles vs. RYU Apparel | Knowles vs. COFCO Joycome Foods | Knowles vs. ULTRA CLEAN HLDGS |
| THAI BEVERAGE vs. TOTAL GABON | THAI BEVERAGE vs. Walgreens Boots Alliance | THAI BEVERAGE vs. Peak Resources Limited |
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 Idea Analyzer module to analyze all characteristics, volatility and risk-adjusted return of Macroaxis ideas.
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