Correlation Between Commercial Vehicle and THAI BEVERAGE
Can any of the company-specific risk be diversified away by investing in both Commercial Vehicle 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 Commercial Vehicle and THAI BEVERAGE into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Commercial Vehicle Group and THAI BEVERAGE, you can compare the effects of market volatilities on Commercial Vehicle 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 Commercial Vehicle with a short position of THAI BEVERAGE. Check out your portfolio center. Please also check ongoing floating volatility patterns of Commercial Vehicle and THAI BEVERAGE.
Diversification Opportunities for Commercial Vehicle and THAI BEVERAGE
-0.29 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Commercial and THAI is -0.29. Overlapping area represents the amount of risk that can be diversified away by holding Commercial Vehicle Group and THAI BEVERAGE in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on THAI BEVERAGE and Commercial Vehicle 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 Commercial Vehicle Group 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 has no effect on the direction of Commercial Vehicle i.e., Commercial Vehicle and THAI BEVERAGE go up and down completely randomly.
Pair Corralation between Commercial Vehicle and THAI BEVERAGE
Assuming the 90 days trading horizon Commercial Vehicle Group is expected to under-perform the THAI BEVERAGE. But the stock apears to be less risky and, when comparing its historical volatility, Commercial Vehicle Group is 1.61 times less risky than THAI BEVERAGE. The stock trades about -0.06 of its potential returns per unit of risk. The THAI BEVERAGE is currently generating about 0.05 of returns per unit of risk over similar time horizon. If you would invest 15.00 in THAI BEVERAGE on October 13, 2024 and sell it today you would earn a total of 21.00 from holding THAI BEVERAGE or generate 140.0% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Commercial Vehicle Group vs. THAI BEVERAGE
Performance |
| Timeline |
| Commercial Vehicle |
| THAI BEVERAGE |
Commercial Vehicle and THAI BEVERAGE Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Commercial Vehicle and THAI BEVERAGE
The main advantage of trading using opposite Commercial Vehicle and THAI BEVERAGE positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Commercial Vehicle 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.| Commercial Vehicle vs. TRAVEL LEISURE DL 01 | Commercial Vehicle vs. CENTURIA OFFICE REIT | Commercial Vehicle vs. PLAYTECH | Commercial Vehicle vs. IMPERIAL TOBACCO |
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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 Portfolio Comparator module to compare the composition, asset allocations and performance of any two portfolios in your account.
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