Correlation Between Internet Thailand and China Resources
Can any of the company-specific risk be diversified away by investing in both Internet Thailand and China Resources 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 China Resources 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 China Resources Beer, you can compare the effects of market volatilities on Internet Thailand and China Resources 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 China Resources. Check out your portfolio center. Please also check ongoing floating volatility patterns of Internet Thailand and China Resources.
Diversification Opportunities for Internet Thailand and China Resources
0.13 | Correlation Coefficient |
Average diversification
The 3 months correlation between Internet and China is 0.13. Overlapping area represents the amount of risk that can be diversified away by holding Internet Thailand PCL and China Resources Beer in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on China Resources Beer 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 China Resources. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of China Resources Beer has no effect on the direction of Internet Thailand i.e., Internet Thailand and China Resources go up and down completely randomly.
Pair Corralation between Internet Thailand and China Resources
Assuming the 90 days trading horizon Internet Thailand PCL is expected to generate 1.78 times more return on investment than China Resources. However, Internet Thailand is 1.78 times more volatile than China Resources Beer. It trades about 0.36 of its potential returns per unit of risk. China Resources Beer is currently generating about -0.19 per unit of risk. If you would invest 11.00 in Internet Thailand PCL on August 29, 2024 and sell it today you would earn a total of 7.00 from holding Internet Thailand PCL or generate 63.64% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 95.65% |
| Values | Daily Returns |
Internet Thailand PCL vs. China Resources Beer
Performance |
| Timeline |
| Internet Thailand PCL |
| China Resources Beer |
Internet Thailand and China Resources Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Internet Thailand and China Resources
The main advantage of trading using opposite Internet Thailand and China Resources positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Internet Thailand position performs unexpectedly, China Resources 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 China Resources will offset losses from the drop in China Resources' long position.| Internet Thailand vs. Apple Inc | Internet Thailand vs. Apple Inc | Internet Thailand vs. Apple Inc | Internet Thailand vs. Apple Inc |
| China Resources vs. Molson Coors Brewing | China Resources vs. MOLSON RS BEVERAGE | China Resources vs. Superior Plus Corp | China Resources vs. SIVERS SEMICONDUCTORS AB |
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 Equity Forecasting module to use basic forecasting models to generate price predictions and determine price momentum.
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