Correlation Between Italian Thai and CH Karnchang
Can any of the company-specific risk be diversified away by investing in both Italian Thai and CH Karnchang 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 Italian Thai and CH Karnchang into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Italian Thai Development Public and CH Karnchang Public, you can compare the effects of market volatilities on Italian Thai and CH Karnchang 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 Italian Thai with a short position of CH Karnchang. Check out your portfolio center. Please also check ongoing floating volatility patterns of Italian Thai and CH Karnchang.
Diversification Opportunities for Italian Thai and CH Karnchang
0.55 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Italian and CH Karnchang is 0.55. Overlapping area represents the amount of risk that can be diversified away by holding Italian Thai Development Publi and CH Karnchang Public in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on CH Karnchang Public and Italian Thai 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 Italian Thai Development Public are associated (or correlated) with CH Karnchang. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of CH Karnchang Public has no effect on the direction of Italian Thai i.e., Italian Thai and CH Karnchang go up and down completely randomly.
Pair Corralation between Italian Thai and CH Karnchang
Assuming the 90 days trading horizon Italian Thai Development Public is expected to generate 44.08 times more return on investment than CH Karnchang. However, Italian Thai is 44.08 times more volatile than CH Karnchang Public. It trades about 0.08 of its potential returns per unit of risk. CH Karnchang Public is currently generating about -0.04 per unit of risk. If you would invest 62.00 in Italian Thai Development Public on October 25, 2024 and sell it today you would lose (14.00) from holding Italian Thai Development Public or give up 22.58% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Italian Thai Development Publi vs. CH Karnchang Public
Performance |
| Timeline |
| Italian Thai Develop |
| CH Karnchang Public |
Italian Thai and CH Karnchang Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Italian Thai and CH Karnchang
The main advantage of trading using opposite Italian Thai and CH Karnchang positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Italian Thai position performs unexpectedly, CH Karnchang 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 CH Karnchang will offset losses from the drop in CH Karnchang's long position.| Italian Thai vs. Land and Houses | Italian Thai vs. CH Karnchang Public | Italian Thai vs. Krung Thai Bank | Italian Thai vs. Bangkok Bank Public |
| CH Karnchang vs. Italian Thai Development Public | CH Karnchang vs. Charoen Pokphand Foods | CH Karnchang vs. Land and Houses | CH Karnchang vs. Bangkok Bank 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 Portfolio Rebalancing module to analyze risk-adjusted returns against different time horizons to find asset-allocation targets.
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