Correlation Between Big 5 and THAI BEVERAGE
Can any of the company-specific risk be diversified away by investing in both Big 5 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 Big 5 and THAI BEVERAGE into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Big 5 Sporting and THAI BEVERAGE, you can compare the effects of market volatilities on Big 5 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 Big 5 with a short position of THAI BEVERAGE. Check out your portfolio center. Please also check ongoing floating volatility patterns of Big 5 and THAI BEVERAGE.
Diversification Opportunities for Big 5 and THAI BEVERAGE
0.47 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Big and THAI is 0.47. Overlapping area represents the amount of risk that can be diversified away by holding Big 5 Sporting and THAI BEVERAGE in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on THAI BEVERAGE and Big 5 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 Big 5 Sporting 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 Big 5 i.e., Big 5 and THAI BEVERAGE go up and down completely randomly.
Pair Corralation between Big 5 and THAI BEVERAGE
Assuming the 90 days horizon Big 5 Sporting is expected to under-perform the THAI BEVERAGE. In addition to that, Big 5 is 1.8 times more volatile than THAI BEVERAGE. It trades about -0.27 of its total potential returns per unit of risk. THAI BEVERAGE is currently generating about -0.02 per unit of volatility. If you would invest 37.00 in THAI BEVERAGE on November 30, 2024 and sell it today you would lose (1.00) from holding THAI BEVERAGE or give up 2.7% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Big 5 Sporting vs. THAI BEVERAGE
Performance |
| Timeline |
| Big 5 Sporting |
| THAI BEVERAGE |
Big 5 and THAI BEVERAGE Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Big 5 and THAI BEVERAGE
The main advantage of trading using opposite Big 5 and THAI BEVERAGE positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Big 5 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.| Big 5 vs. United Utilities Group | Big 5 vs. Spirent Communications plc | Big 5 vs. SOUTHWEST AIRLINES | Big 5 vs. Chesapeake Utilities |
| THAI BEVERAGE vs. Uber Technologies | THAI BEVERAGE vs. Addtech AB | THAI BEVERAGE vs. THORNEY TECHS LTD | THAI BEVERAGE 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 Portfolio Comparator module to compare the composition, asset allocations and performance of any two portfolios in your account.
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