Correlation Between Nova Organic and Thai Industrial
Can any of the company-specific risk be diversified away by investing in both Nova Organic and Thai Industrial 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 Nova Organic and Thai Industrial into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Nova Organic PCL and Thai Industrial, you can compare the effects of market volatilities on Nova Organic and Thai Industrial 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 Nova Organic with a short position of Thai Industrial. Check out your portfolio center. Please also check ongoing floating volatility patterns of Nova Organic and Thai Industrial.
Diversification Opportunities for Nova Organic and Thai Industrial
0.7 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Nova and Thai is 0.7. Overlapping area represents the amount of risk that can be diversified away by holding Nova Organic PCL and Thai Industrial in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Thai Industrial and Nova Organic 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 Nova Organic PCL are associated (or correlated) with Thai Industrial. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Thai Industrial has no effect on the direction of Nova Organic i.e., Nova Organic and Thai Industrial go up and down completely randomly.
Pair Corralation between Nova Organic and Thai Industrial
Assuming the 90 days horizon Nova Organic PCL is expected to under-perform the Thai Industrial. But the stock apears to be less risky and, when comparing its historical volatility, Nova Organic PCL is 15.57 times less risky than Thai Industrial. The stock trades about -0.05 of its potential returns per unit of risk. The Thai Industrial is currently generating about 0.05 of returns per unit of risk over similar time horizon. If you would invest 865.00 in Thai Industrial on September 14, 2024 and sell it today you would lose (110.00) from holding Thai Industrial or give up 12.72% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Nova Organic PCL vs. Thai Industrial
Performance |
| Timeline |
| Nova Organic PCL |
| Thai Industrial |
Nova Organic and Thai Industrial Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Nova Organic and Thai Industrial
The main advantage of trading using opposite Nova Organic and Thai Industrial positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Nova Organic position performs unexpectedly, Thai Industrial 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 Thai Industrial will offset losses from the drop in Thai Industrial's long position.| Nova Organic vs. North East Rubbers | Nova Organic vs. RB Food Supply | Nova Organic vs. Osotspa Public | Nova Organic vs. The ONE Enterprise |
| Thai Industrial vs. Gulf Energy Development | Thai Industrial vs. CP ALL Public | Thai Industrial vs. BGrimm Power Public | Thai Industrial vs. Bangkok Expressway and |
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 Directory module to find actively traded commodities issued by global exchanges.
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