Correlation Between Italian Thai and Hana Microelectronics
Can any of the company-specific risk be diversified away by investing in both Italian Thai and Hana Microelectronics 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 Hana Microelectronics 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 Hana Microelectronics Public, you can compare the effects of market volatilities on Italian Thai and Hana Microelectronics 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 Hana Microelectronics. Check out your portfolio center. Please also check ongoing floating volatility patterns of Italian Thai and Hana Microelectronics.
Diversification Opportunities for Italian Thai and Hana Microelectronics
0.72 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Italian and Hana is 0.72. Overlapping area represents the amount of risk that can be diversified away by holding Italian Thai Development Publi and Hana Microelectronics Public in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Hana Microelectronics 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 Hana Microelectronics. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Hana Microelectronics has no effect on the direction of Italian Thai i.e., Italian Thai and Hana Microelectronics go up and down completely randomly.
Pair Corralation between Italian Thai and Hana Microelectronics
Assuming the 90 days trading horizon Italian Thai Development Public is expected to under-perform the Hana Microelectronics. In addition to that, Italian Thai is 1.16 times more volatile than Hana Microelectronics Public. It trades about -0.76 of its total potential returns per unit of risk. Hana Microelectronics Public is currently generating about -0.2 per unit of volatility. If you would invest 2,360 in Hana Microelectronics Public on November 27, 2024 and sell it today you would lose (220.00) from holding Hana Microelectronics Public or give up 9.32% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Italian Thai Development Publi vs. Hana Microelectronics Public
Performance |
| Timeline |
| Italian Thai Develop |
| Hana Microelectronics |
Italian Thai and Hana Microelectronics Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Italian Thai and Hana Microelectronics
The main advantage of trading using opposite Italian Thai and Hana Microelectronics positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Italian Thai position performs unexpectedly, Hana Microelectronics 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 Hana Microelectronics will offset losses from the drop in Hana Microelectronics' 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 |
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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 Commodity Channel module to use Commodity Channel Index to analyze current equity momentum.
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