Correlation Between IT City and Internet Thailand
Can any of the company-specific risk be diversified away by investing in both IT City and Internet Thailand 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 IT City and Internet Thailand into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between IT City Public and Internet Thailand Public, you can compare the effects of market volatilities on IT City and Internet Thailand 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 IT City with a short position of Internet Thailand. Check out your portfolio center. Please also check ongoing floating volatility patterns of IT City and Internet Thailand.
Diversification Opportunities for IT City and Internet Thailand
0.03 | Correlation Coefficient |
Significant diversification
The 3 months correlation between IT City and Internet is 0.03. Overlapping area represents the amount of risk that can be diversified away by holding IT City Public and Internet Thailand Public in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Internet Thailand Public and IT City 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 IT City Public are associated (or correlated) with Internet Thailand. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Internet Thailand Public has no effect on the direction of IT City i.e., IT City and Internet Thailand go up and down completely randomly.
Pair Corralation between IT City and Internet Thailand
Assuming the 90 days horizon IT City Public is expected to under-perform the Internet Thailand. But the stock apears to be less risky and, when comparing its historical volatility, IT City Public is 2.21 times less risky than Internet Thailand. The stock trades about -0.1 of its potential returns per unit of risk. The Internet Thailand Public is currently generating about 0.18 of returns per unit of risk over similar time horizon. If you would invest 444.00 in Internet Thailand Public on September 2, 2024 and sell it today you would earn a total of 131.00 from holding Internet Thailand Public or generate 29.5% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
IT City Public vs. Internet Thailand Public
Performance |
| Timeline |
| IT City Public |
| Internet Thailand Public |
IT City and Internet Thailand Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with IT City and Internet Thailand
The main advantage of trading using opposite IT City and Internet Thailand positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if IT City position performs unexpectedly, Internet Thailand 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 Internet Thailand will offset losses from the drop in Internet Thailand's long position.| IT City vs. Internet Thailand Public | IT City vs. Jasmine International Public | IT City vs. Hana Microelectronics Public | IT City vs. Italian Thai Development Public |
| Internet Thailand vs. AP Public | Internet Thailand vs. Jasmine International Public | Internet Thailand vs. Asia Plus Group | Internet Thailand vs. Bangchak Public |
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 Watchlist Optimization module to optimize watchlists to build efficient portfolios or rebalance existing positions based on the mean-variance optimization algorithm.
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