Correlation Between Home Product and TOA Paint
Can any of the company-specific risk be diversified away by investing in both Home Product and TOA Paint 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 Home Product and TOA Paint into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Home Product Center and TOA Paint Public, you can compare the effects of market volatilities on Home Product and TOA Paint 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 Home Product with a short position of TOA Paint. Check out your portfolio center. Please also check ongoing floating volatility patterns of Home Product and TOA Paint.
Diversification Opportunities for Home Product and TOA Paint
0.73 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Home and TOA is 0.73. Overlapping area represents the amount of risk that can be diversified away by holding Home Product Center and TOA Paint Public in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on TOA Paint Public and Home Product 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 Home Product Center are associated (or correlated) with TOA Paint. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of TOA Paint Public has no effect on the direction of Home Product i.e., Home Product and TOA Paint go up and down completely randomly.
Pair Corralation between Home Product and TOA Paint
Assuming the 90 days trading horizon Home Product Center is expected to generate 0.69 times more return on investment than TOA Paint. However, Home Product Center is 1.45 times less risky than TOA Paint. It trades about -0.14 of its potential returns per unit of risk. TOA Paint Public is currently generating about -0.3 per unit of risk. If you would invest 1,040 in Home Product Center on September 3, 2024 and sell it today you would lose (95.00) from holding Home Product Center or give up 9.13% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Home Product Center vs. TOA Paint Public
Performance |
| Timeline |
| Home Product Center |
| TOA Paint Public |
Home Product and TOA Paint Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Home Product and TOA Paint
The main advantage of trading using opposite Home Product and TOA Paint positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Home Product position performs unexpectedly, TOA Paint 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 TOA Paint will offset losses from the drop in TOA Paint's long position.| Home Product vs. CP ALL Public | Home Product vs. Bangkok Dusit Medical | Home Product vs. Central Pattana Public | Home Product vs. Advanced Info Service |
| TOA Paint vs. Berli Jucker Public | TOA Paint vs. Carabao Group Public | TOA Paint vs. Home Product Center | TOA Paint vs. Bangkok Dusit Medical |
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 Volatility Analysis module to get historical volatility and risk analysis based on latest market data.
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