Correlation Between Communication System and Thai Rubber
Can any of the company-specific risk be diversified away by investing in both Communication System and Thai Rubber 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 Communication System and Thai Rubber into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Communication System Solution and Thai Rubber Latex, you can compare the effects of market volatilities on Communication System and Thai Rubber 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 Communication System with a short position of Thai Rubber. Check out your portfolio center. Please also check ongoing floating volatility patterns of Communication System and Thai Rubber.
Diversification Opportunities for Communication System and Thai Rubber
-0.03 | Correlation Coefficient |
Good diversification
The 3 months correlation between Communication and Thai is -0.03. Overlapping area represents the amount of risk that can be diversified away by holding Communication System Solution and Thai Rubber Latex in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Thai Rubber Latex and Communication System 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 Communication System Solution are associated (or correlated) with Thai Rubber. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Thai Rubber Latex has no effect on the direction of Communication System i.e., Communication System and Thai Rubber go up and down completely randomly.
Pair Corralation between Communication System and Thai Rubber
Assuming the 90 days trading horizon Communication System Solution is expected to generate 1.67 times more return on investment than Thai Rubber. However, Communication System is 1.67 times more volatile than Thai Rubber Latex. It trades about 0.19 of its potential returns per unit of risk. Thai Rubber Latex is currently generating about -0.3 per unit of risk. If you would invest 85.00 in Communication System Solution on August 26, 2024 and sell it today you would earn a total of 13.00 from holding Communication System Solution or generate 15.29% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Communication System Solution vs. Thai Rubber Latex
Performance |
| Timeline |
| Communication System |
| Thai Rubber Latex |
Communication System and Thai Rubber Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Communication System and Thai Rubber
The main advantage of trading using opposite Communication System and Thai Rubber positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Communication System position performs unexpectedly, Thai Rubber 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 Rubber will offset losses from the drop in Thai Rubber's long position.| Communication System vs. Tata Steel Public | Communication System vs. Thaifoods Group Public | Communication System vs. TMT Steel Public | Communication System vs. The Erawan Group |
| Thai Rubber vs. Business Online PCL | Thai Rubber vs. Communication System Solution | Thai Rubber vs. CI Group Public | Thai Rubber vs. The Erawan Group |
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 Bonds Directory module to find actively traded corporate debentures issued by US companies.
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