Correlation Between Italian Thai and Home Product
Can any of the company-specific risk be diversified away by investing in both Italian Thai and Home Product 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 Home Product 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 Home Product Center, you can compare the effects of market volatilities on Italian Thai and Home Product 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 Home Product. Check out your portfolio center. Please also check ongoing floating volatility patterns of Italian Thai and Home Product.
Diversification Opportunities for Italian Thai and Home Product
0.71 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Italian and Home is 0.71. Overlapping area represents the amount of risk that can be diversified away by holding Italian Thai Development Publi and Home Product Center in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Home Product Center 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 Home Product. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Home Product Center has no effect on the direction of Italian Thai i.e., Italian Thai and Home Product go up and down completely randomly.
Pair Corralation between Italian Thai and Home Product
Assuming the 90 days trading horizon Italian Thai Development Public is expected to under-perform the Home Product. In addition to that, Italian Thai is 2.0 times more volatile than Home Product Center. It trades about -0.16 of its total potential returns per unit of risk. Home Product Center is currently generating about 0.11 per unit of volatility. If you would invest 945.00 in Home Product Center on September 13, 2024 and sell it today you would earn a total of 30.00 from holding Home Product Center or generate 3.17% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Italian Thai Development Publi vs. Home Product Center
Performance |
| Timeline |
| Italian Thai Develop |
| Home Product Center |
Italian Thai and Home Product Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Italian Thai and Home Product
The main advantage of trading using opposite Italian Thai and Home Product positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Italian Thai position performs unexpectedly, Home Product 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 Home Product will offset losses from the drop in Home Product'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 |
| Home Product vs. Hwa Fong Rubber | Home Product vs. AAPICO Hitech Public | Home Product vs. Haad Thip Public | Home Product vs. Italian Thai Development 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 Investing Opportunities module to build portfolios using our predefined set of ideas and optimize them against your investing preferences.
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