Correlation Between CDN IMPERIAL and Thai Beverage
Can any of the company-specific risk be diversified away by investing in both CDN IMPERIAL 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 CDN IMPERIAL and Thai Beverage into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between CDN IMPERIAL BANK and Thai Beverage Public, you can compare the effects of market volatilities on CDN IMPERIAL 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 CDN IMPERIAL with a short position of Thai Beverage. Check out your portfolio center. Please also check ongoing floating volatility patterns of CDN IMPERIAL and Thai Beverage.
Diversification Opportunities for CDN IMPERIAL and Thai Beverage
0.38 | Correlation Coefficient |
Weak diversification
The 3 months correlation between CDN and Thai is 0.38. Overlapping area represents the amount of risk that can be diversified away by holding CDN IMPERIAL BANK 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 CDN IMPERIAL 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 CDN IMPERIAL BANK 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 CDN IMPERIAL i.e., CDN IMPERIAL and Thai Beverage go up and down completely randomly.
Pair Corralation between CDN IMPERIAL and Thai Beverage
Assuming the 90 days trading horizon CDN IMPERIAL is expected to generate 1.28 times less return on investment than Thai Beverage. But when comparing it to its historical volatility, CDN IMPERIAL BANK is 3.72 times less risky than Thai Beverage. It trades about 0.1 of its potential returns per unit of risk. Thai Beverage Public is currently generating about 0.03 of returns per unit of risk over similar time horizon. If you would invest 25.00 in Thai Beverage Public on November 27, 2024 and sell it today you would earn a total of 10.00 from holding Thai Beverage Public or generate 40.0% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
CDN IMPERIAL BANK vs. Thai Beverage Public
Performance |
| Timeline |
| CDN IMPERIAL BANK |
| Thai Beverage Public |
CDN IMPERIAL and Thai Beverage Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with CDN IMPERIAL and Thai Beverage
The main advantage of trading using opposite CDN IMPERIAL and Thai Beverage positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if CDN IMPERIAL 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.| CDN IMPERIAL vs. Apple Inc | CDN IMPERIAL vs. Apple Inc | CDN IMPERIAL vs. Apple Inc | CDN IMPERIAL vs. Apple Inc |
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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 Funds Screener module to find actively-traded funds from around the world traded on over 30 global exchanges.
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