Correlation Between NORWEGIAN AIR and Thai Beverage
Can any of the company-specific risk be diversified away by investing in both NORWEGIAN AIR and Thai Beverage 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 NORWEGIAN AIR and Thai Beverage into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between NORWEGIAN AIR SHUT and Thai Beverage Public, you can compare the effects of market volatilities on NORWEGIAN AIR and Thai Beverage 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 NORWEGIAN AIR with a short position of Thai Beverage. Check out your portfolio center. Please also check ongoing floating volatility patterns of NORWEGIAN AIR and Thai Beverage.
Diversification Opportunities for NORWEGIAN AIR and Thai Beverage
0.1 | Correlation Coefficient |
Average diversification
The 3 months correlation between NORWEGIAN and Thai is 0.1. Overlapping area represents the amount of risk that can be diversified away by holding NORWEGIAN AIR SHUT and Thai Beverage Public in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Thai Beverage Public and NORWEGIAN AIR 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 NORWEGIAN AIR SHUT are associated (or correlated) with Thai Beverage. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Thai Beverage Public has no effect on the direction of NORWEGIAN AIR i.e., NORWEGIAN AIR and Thai Beverage go up and down completely randomly.
Pair Corralation between NORWEGIAN AIR and Thai Beverage
Assuming the 90 days trading horizon NORWEGIAN AIR SHUT is expected to generate 0.89 times more return on investment than Thai Beverage. However, NORWEGIAN AIR SHUT is 1.12 times less risky than Thai Beverage. It trades about 0.08 of its potential returns per unit of risk. Thai Beverage Public is currently generating about 0.04 per unit of risk. If you would invest 87.00 in NORWEGIAN AIR SHUT on October 1, 2024 and sell it today you would earn a total of 6.00 from holding NORWEGIAN AIR SHUT or generate 6.9% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
NORWEGIAN AIR SHUT vs. Thai Beverage Public
Performance |
| Timeline |
| NORWEGIAN AIR SHUT |
| Thai Beverage Public |
NORWEGIAN AIR and Thai Beverage Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with NORWEGIAN AIR and Thai Beverage
The main advantage of trading using opposite NORWEGIAN AIR and Thai Beverage positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if NORWEGIAN AIR position performs unexpectedly, Thai Beverage 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 Beverage will offset losses from the drop in Thai Beverage's long position.The idea behind NORWEGIAN AIR SHUT and Thai Beverage Public pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.| Thai Beverage vs. Fukuyama Transporting Co | Thai Beverage vs. SCIENCE IN SPORT | Thai Beverage vs. COLUMBIA SPORTSWEAR | Thai Beverage vs. CanSino Biologics |
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 Piotroski F Score module to get Piotroski F Score based on the binary analysis strategy of nine different fundamentals.
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