Correlation Between DFS Furniture and Thai Beverage
Can any of the company-specific risk be diversified away by investing in both DFS Furniture 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 DFS Furniture and Thai Beverage into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between DFS Furniture PLC and Thai Beverage Public, you can compare the effects of market volatilities on DFS Furniture 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 DFS Furniture with a short position of Thai Beverage. Check out your portfolio center. Please also check ongoing floating volatility patterns of DFS Furniture and Thai Beverage.
Diversification Opportunities for DFS Furniture and Thai Beverage
0.05 | Correlation Coefficient |
Significant diversification
The 3 months correlation between DFS and Thai is 0.05. Overlapping area represents the amount of risk that can be diversified away by holding DFS Furniture PLC 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 DFS Furniture 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 DFS Furniture PLC 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 DFS Furniture i.e., DFS Furniture and Thai Beverage go up and down completely randomly.
Pair Corralation between DFS Furniture and Thai Beverage
Assuming the 90 days trading horizon DFS Furniture is expected to generate 9.47 times less return on investment than Thai Beverage. But when comparing it to its historical volatility, DFS Furniture PLC is 2.14 times less risky than Thai Beverage. It trades about 0.01 of its potential returns per unit of risk. Thai Beverage Public is currently generating about 0.06 of returns per unit of risk over similar time horizon. If you would invest 15.00 in Thai Beverage Public on September 2, 2024 and sell it today you would earn a total of 24.00 from holding Thai Beverage Public or generate 160.0% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
DFS Furniture PLC vs. Thai Beverage Public
Performance |
| Timeline |
| DFS Furniture PLC |
| Thai Beverage Public |
DFS Furniture and Thai Beverage Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with DFS Furniture and Thai Beverage
The main advantage of trading using opposite DFS Furniture and Thai Beverage positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if DFS Furniture 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.| DFS Furniture vs. Apple Inc | DFS Furniture vs. Apple Inc | DFS Furniture vs. Apple Inc | DFS Furniture vs. Apple Inc |
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 Fundamental Analysis module to view fundamental data based on most recent published financial statements.
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