Correlation Between Constellation Brands and Thai Beverage
Can any of the company-specific risk be diversified away by investing in both Constellation Brands 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 Constellation Brands and Thai Beverage into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Constellation Brands and Thai Beverage Public, you can compare the effects of market volatilities on Constellation Brands 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 Constellation Brands with a short position of Thai Beverage. Check out your portfolio center. Please also check ongoing floating volatility patterns of Constellation Brands and Thai Beverage.
Diversification Opportunities for Constellation Brands and Thai Beverage
0.1 | Correlation Coefficient |
Average diversification
The 3 months correlation between Constellation and Thai is 0.1. Overlapping area represents the amount of risk that can be diversified away by holding Constellation Brands 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 Constellation Brands 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 Constellation Brands 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 Constellation Brands i.e., Constellation Brands and Thai Beverage go up and down completely randomly.
Pair Corralation between Constellation Brands and Thai Beverage
Assuming the 90 days trading horizon Constellation Brands is expected to under-perform the Thai Beverage. But the stock apears to be less risky and, when comparing its historical volatility, Constellation Brands is 3.45 times less risky than Thai Beverage. The stock trades about -0.03 of its potential returns per unit of risk. The Thai Beverage Public is currently generating about 0.07 of returns per unit of risk over similar time horizon. If you would invest 19.00 in Thai Beverage Public on November 5, 2024 and sell it today you would earn a total of 19.00 from holding Thai Beverage Public or generate 100.0% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Constellation Brands vs. Thai Beverage Public
Performance |
| Timeline |
| Constellation Brands |
| Thai Beverage Public |
Constellation Brands and Thai Beverage Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Constellation Brands and Thai Beverage
The main advantage of trading using opposite Constellation Brands and Thai Beverage positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Constellation Brands 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.| Constellation Brands vs. KENEDIX OFFICE INV | Constellation Brands vs. Aedas Homes SA | Constellation Brands vs. Hisense Home Appliances | Constellation Brands vs. OFFICE DEPOT |
| Thai Beverage vs. Casio Computer CoLtd | Thai Beverage vs. VIVA WINE GROUP | Thai Beverage vs. HEMISPHERE EGY | Thai Beverage vs. Ribbon Communications |
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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