Correlation Between Eastern Power and Thai German

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Can any of the company-specific risk be diversified away by investing in both Eastern Power and Thai German 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 Eastern Power and Thai German into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Eastern Power Group and Thai German Products Public, you can compare the effects of market volatilities on Eastern Power and Thai German 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 Eastern Power with a short position of Thai German. Check out your portfolio center. Please also check ongoing floating volatility patterns of Eastern Power and Thai German.

Diversification Opportunities for Eastern Power and Thai German

0.82
  Correlation Coefficient

Very poor diversification

The 3 months correlation between Eastern and Thai is 0.82. Overlapping area represents the amount of risk that can be diversified away by holding Eastern Power Group and Thai German Products Public in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Thai German Products and Eastern Power 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 Eastern Power Group are associated (or correlated) with Thai German. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Thai German Products has no effect on the direction of Eastern Power i.e., Eastern Power and Thai German go up and down completely randomly.

Pair Corralation between Eastern Power and Thai German

Assuming the 90 days horizon Eastern Power Group is expected to under-perform the Thai German. But the stock apears to be less risky and, when comparing its historical volatility, Eastern Power Group is 4.43 times less risky than Thai German. The stock trades about -0.27 of its potential returns per unit of risk. The Thai German Products Public is currently generating about 0.04 of returns per unit of risk over similar time horizon. If you would invest  8.00  in Thai German Products Public on October 20, 2024 and sell it today you would earn a total of  0.00  from holding Thai German Products Public or generate 0.0% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthStrong
Accuracy100.0%
ValuesDaily Returns

Eastern Power Group  vs.  Thai German Products Public

 Performance 
       Timeline  
Eastern Power Group 

Risk-Adjusted Performance

0 of 100

 
Weak
 
Strong
Very Weak
Over the last 90 days Eastern Power Group has generated negative risk-adjusted returns adding no value to investors with long positions. Despite conflicting performance in the last few months, the Stock's fundamental drivers remain quite persistent which may send shares a bit higher in February 2025. The latest mess may also be a sign of long-standing up-swing for the company institutional investors.
Thai German Products 

Risk-Adjusted Performance

0 of 100

 
Weak
 
Strong
Very Weak
Over the last 90 days Thai German Products Public has generated negative risk-adjusted returns adding no value to investors with long positions. Despite conflicting performance in the last few months, the Stock's fundamental drivers remain somewhat strong which may send shares a bit higher in February 2025. The current disturbance may also be a sign of long term up-swing for the company investors.

Eastern Power and Thai German Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Eastern Power and Thai German

The main advantage of trading using opposite Eastern Power and Thai German positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Eastern Power position performs unexpectedly, Thai German 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 German will offset losses from the drop in Thai German's long position.
The idea behind Eastern Power Group and Thai German Products Public pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.
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 Financial Widgets module to easily integrated Macroaxis content with over 30 different plug-and-play financial widgets.

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