Correlation Between Major Drilling and Thai Beverage
Can any of the company-specific risk be diversified away by investing in both Major Drilling 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 Major Drilling and Thai Beverage into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Major Drilling Group and Thai Beverage Public, you can compare the effects of market volatilities on Major Drilling 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 Major Drilling with a short position of Thai Beverage. Check out your portfolio center. Please also check ongoing floating volatility patterns of Major Drilling and Thai Beverage.
Diversification Opportunities for Major Drilling and Thai Beverage
0.38 | Correlation Coefficient |
Weak diversification
The 3 months correlation between Major and Thai is 0.38. Overlapping area represents the amount of risk that can be diversified away by holding Major Drilling Group and Thai Beverage Public in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Thai Beverage Public and Major Drilling 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 Major Drilling Group 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 Public has no effect on the direction of Major Drilling i.e., Major Drilling and Thai Beverage go up and down completely randomly.
Pair Corralation between Major Drilling and Thai Beverage
Assuming the 90 days horizon Major Drilling Group is expected to under-perform the Thai Beverage. But the stock apears to be less risky and, when comparing its historical volatility, Major Drilling Group is 1.27 times less risky than Thai Beverage. The stock trades about -0.1 of its potential returns per unit of risk. The Thai Beverage Public is currently generating about 0.1 of returns per unit of risk over similar time horizon. If you would invest 35.00 in Thai Beverage Public on September 22, 2024 and sell it today you would earn a total of 2.00 from holding Thai Beverage Public or generate 5.71% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Major Drilling Group vs. Thai Beverage Public
Performance |
| Timeline |
| Major Drilling Group |
| Thai Beverage Public |
Major Drilling and Thai Beverage Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Major Drilling and Thai Beverage
The main advantage of trading using opposite Major Drilling and Thai Beverage positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Major Drilling 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.| Major Drilling vs. BHP Group Limited | Major Drilling vs. BHP Group Limited | Major Drilling vs. Rio Tinto Group | Major Drilling vs. Rio Tinto Group |
| Thai Beverage vs. USWE SPORTS AB | Thai Beverage vs. DISTRICT METALS | Thai Beverage vs. PLAYSTUDIOS A DL 0001 | Thai Beverage vs. ARISTOCRAT LEISURE |
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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