Correlation Between Internet Thailand and Iridium Communications
Can any of the company-specific risk be diversified away by investing in both Internet Thailand and Iridium Communications 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 Internet Thailand and Iridium Communications into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Internet Thailand PCL and Iridium Communications, you can compare the effects of market volatilities on Internet Thailand and Iridium Communications 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 Internet Thailand with a short position of Iridium Communications. Check out your portfolio center. Please also check ongoing floating volatility patterns of Internet Thailand and Iridium Communications.
Diversification Opportunities for Internet Thailand and Iridium Communications
0.25 | Correlation Coefficient |
Modest diversification
The 3 months correlation between Internet and Iridium is 0.25. Overlapping area represents the amount of risk that can be diversified away by holding Internet Thailand PCL and Iridium Communications in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Iridium Communications and Internet Thailand 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 Internet Thailand PCL are associated (or correlated) with Iridium Communications. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Iridium Communications has no effect on the direction of Internet Thailand i.e., Internet Thailand and Iridium Communications go up and down completely randomly.
Pair Corralation between Internet Thailand and Iridium Communications
Assuming the 90 days trading horizon Internet Thailand PCL is expected to generate 2.56 times more return on investment than Iridium Communications. However, Internet Thailand is 2.56 times more volatile than Iridium Communications. It trades about 0.43 of its potential returns per unit of risk. Iridium Communications is currently generating about 0.1 per unit of risk. If you would invest 11.00 in Internet Thailand PCL on August 28, 2024 and sell it today you would earn a total of 8.00 from holding Internet Thailand PCL or generate 72.73% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 95.45% |
| Values | Daily Returns |
Internet Thailand PCL vs. Iridium Communications
Performance |
| Timeline |
| Internet Thailand PCL |
| Iridium Communications |
Internet Thailand and Iridium Communications Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Internet Thailand and Iridium Communications
The main advantage of trading using opposite Internet Thailand and Iridium Communications positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Internet Thailand position performs unexpectedly, Iridium Communications 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 Iridium Communications will offset losses from the drop in Iridium Communications' long position.| Internet Thailand vs. Apple Inc | Internet Thailand vs. Apple Inc | Internet Thailand vs. Apple Inc | Internet Thailand vs. Apple Inc |
| Iridium Communications vs. T Mobile | Iridium Communications vs. ATT Inc | Iridium Communications vs. Deutsche Telekom AG |
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 Investing Opportunities module to build portfolios using our predefined set of ideas and optimize them against your investing preferences.
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