Correlation Between Dow and Internet Thailand
Can any of the company-specific risk be diversified away by investing in both Dow and Internet Thailand 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 Dow and Internet Thailand into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Dow Inc and Internet Thailand PCL, you can compare the effects of market volatilities on Dow and Internet Thailand 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 Dow with a short position of Internet Thailand. Check out your portfolio center. Please also check ongoing floating volatility patterns of Dow and Internet Thailand.
Diversification Opportunities for Dow and Internet Thailand
-0.67 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Dow and Internet is -0.67. Overlapping area represents the amount of risk that can be diversified away by holding Dow Inc and Internet Thailand PCL in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Internet Thailand PCL and Dow 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 Dow Inc are associated (or correlated) with Internet Thailand. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Internet Thailand PCL has no effect on the direction of Dow i.e., Dow and Internet Thailand go up and down completely randomly.
Pair Corralation between Dow and Internet Thailand
Assuming the 90 days horizon Dow Inc is expected to under-perform the Internet Thailand. But the stock apears to be less risky and, when comparing its historical volatility, Dow Inc is 3.63 times less risky than Internet Thailand. The stock trades about -0.14 of its potential returns per unit of risk. The Internet Thailand PCL is currently generating about 0.27 of returns per unit of risk over similar time horizon. If you would invest 11.00 in Internet Thailand PCL on September 2, 2024 and sell it today you would earn a total of 5.00 from holding Internet Thailand PCL or generate 45.45% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Dow Inc vs. Internet Thailand PCL
Performance |
| Timeline |
| Dow Inc |
| Internet Thailand PCL |
Dow and Internet Thailand Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Dow and Internet Thailand
The main advantage of trading using opposite Dow and Internet Thailand positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Dow position performs unexpectedly, Internet Thailand 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 Internet Thailand will offset losses from the drop in Internet Thailand's long position.| Dow vs. Internet Thailand PCL | Dow vs. Liberty Broadband | Dow vs. Siamgas And Petrochemicals | Dow vs. Khiron Life Sciences |
| Internet Thailand vs. Lion Biotechnologies | Internet Thailand vs. Global Ship Lease | Internet Thailand vs. PKSHA TECHNOLOGY INC | Internet Thailand vs. Air Lease |
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 Technical Analysis module to check basic technical indicators and analysis based on most latest market data.
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