Correlation Between Lam Soon and Thoresen Thai
Can any of the company-specific risk be diversified away by investing in both Lam Soon and Thoresen Thai 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 Lam Soon and Thoresen Thai into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Lam Soon Public and Thoresen Thai Agencies, you can compare the effects of market volatilities on Lam Soon and Thoresen Thai 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 Lam Soon with a short position of Thoresen Thai. Check out your portfolio center. Please also check ongoing floating volatility patterns of Lam Soon and Thoresen Thai.
Diversification Opportunities for Lam Soon and Thoresen Thai
0.06 | Correlation Coefficient |
Significant diversification
The 3 months correlation between Lam and Thoresen is 0.06. Overlapping area represents the amount of risk that can be diversified away by holding Lam Soon Public and Thoresen Thai Agencies in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Thoresen Thai Agencies and Lam Soon 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 Lam Soon Public are associated (or correlated) with Thoresen Thai. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Thoresen Thai Agencies has no effect on the direction of Lam Soon i.e., Lam Soon and Thoresen Thai go up and down completely randomly.
Pair Corralation between Lam Soon and Thoresen Thai
Assuming the 90 days trading horizon Lam Soon is expected to generate 3.01 times less return on investment than Thoresen Thai. But when comparing it to its historical volatility, Lam Soon Public is 2.6 times less risky than Thoresen Thai. It trades about 0.11 of its potential returns per unit of risk. Thoresen Thai Agencies is currently generating about 0.13 of returns per unit of risk over similar time horizon. If you would invest 550.00 in Thoresen Thai Agencies on September 1, 2024 and sell it today you would earn a total of 40.00 from holding Thoresen Thai Agencies or generate 7.27% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 95.65% |
| Values | Daily Returns |
Lam Soon Public vs. Thoresen Thai Agencies
Performance |
| Timeline |
| Lam Soon Public |
| Thoresen Thai Agencies |
Lam Soon and Thoresen Thai Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Lam Soon and Thoresen Thai
The main advantage of trading using opposite Lam Soon and Thoresen Thai positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Lam Soon position performs unexpectedly, Thoresen Thai 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 Thoresen Thai will offset losses from the drop in Thoresen Thai's long position.| Lam Soon vs. Haad Thip Public | Lam Soon vs. Hwa Fong Rubber | Lam Soon vs. GFPT Public | Lam Soon vs. KGI Securities 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 Price Ceiling Movement module to calculate and plot Price Ceiling Movement for different equity instruments.
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