Correlation Between Iridium Communications and Thai Beverage
Can any of the company-specific risk be diversified away by investing in both Iridium Communications 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 Iridium Communications and Thai Beverage into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Iridium Communications and Thai Beverage Public, you can compare the effects of market volatilities on Iridium Communications 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 Iridium Communications with a short position of Thai Beverage. Check out your portfolio center. Please also check ongoing floating volatility patterns of Iridium Communications and Thai Beverage.
Diversification Opportunities for Iridium Communications and Thai Beverage
0.17 | Correlation Coefficient |
Average diversification
The 3 months correlation between Iridium and Thai is 0.17. Overlapping area represents the amount of risk that can be diversified away by holding Iridium Communications 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 Iridium Communications 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 Iridium Communications 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 Iridium Communications i.e., Iridium Communications and Thai Beverage go up and down completely randomly.
Pair Corralation between Iridium Communications and Thai Beverage
Assuming the 90 days horizon Iridium Communications is expected to generate 2.37 times less return on investment than Thai Beverage. But when comparing it to its historical volatility, Iridium Communications is 1.13 times less risky than Thai Beverage. It trades about 0.07 of its potential returns per unit of risk. Thai Beverage Public is currently generating about 0.14 of returns per unit of risk over similar time horizon. If you would invest 36.00 in Thai Beverage Public on September 1, 2024 and sell it today you would earn a total of 3.00 from holding Thai Beverage Public or generate 8.33% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Iridium Communications vs. Thai Beverage Public
Performance |
| Timeline |
| Iridium Communications |
| Thai Beverage Public |
Iridium Communications and Thai Beverage Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Iridium Communications and Thai Beverage
The main advantage of trading using opposite Iridium Communications and Thai Beverage positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Iridium Communications 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.| Iridium Communications vs. Deutsche Telekom AG | Iridium Communications vs. Superior Plus Corp | Iridium Communications vs. NMI Holdings | Iridium Communications vs. Origin Agritech |
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 Price Transformation module to use Price Transformation models to analyze the depth of different equity instruments across global markets.
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