Correlation Between NEXT Plc and THAI BEVERAGE
Can any of the company-specific risk be diversified away by investing in both NEXT Plc 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 NEXT Plc and THAI BEVERAGE into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between NEXT plc and THAI BEVERAGE, you can compare the effects of market volatilities on NEXT Plc 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 NEXT Plc with a short position of THAI BEVERAGE. Check out your portfolio center. Please also check ongoing floating volatility patterns of NEXT Plc and THAI BEVERAGE.
Diversification Opportunities for NEXT Plc and THAI BEVERAGE
0.03 | Correlation Coefficient |
Significant diversification
The 3 months correlation between NEXT and THAI is 0.03. Overlapping area represents the amount of risk that can be diversified away by holding NEXT plc and THAI BEVERAGE in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on THAI BEVERAGE and NEXT Plc 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 NEXT plc 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 has no effect on the direction of NEXT Plc i.e., NEXT Plc and THAI BEVERAGE go up and down completely randomly.
Pair Corralation between NEXT Plc and THAI BEVERAGE
Assuming the 90 days horizon NEXT Plc is expected to generate 1.75 times less return on investment than THAI BEVERAGE. But when comparing it to its historical volatility, NEXT plc is 2.64 times less risky than THAI BEVERAGE. It trades about 0.09 of its potential returns per unit of risk. THAI BEVERAGE is currently generating about 0.06 of returns per unit of risk over similar time horizon. If you would invest 20.00 in THAI BEVERAGE on September 2, 2024 and sell it today you would earn a total of 19.00 from holding THAI BEVERAGE or generate 95.0% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
NEXT plc vs. THAI BEVERAGE
Performance |
| Timeline |
| NEXT plc |
| THAI BEVERAGE |
NEXT Plc and THAI BEVERAGE Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with NEXT Plc and THAI BEVERAGE
The main advantage of trading using opposite NEXT Plc and THAI BEVERAGE positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if NEXT Plc 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.| NEXT Plc vs. DELTA AIR LINES | NEXT Plc vs. Clearside Biomedical | NEXT Plc vs. URBAN OUTFITTERS | NEXT Plc vs. MYFAIR GOLD P |
| THAI BEVERAGE vs. SIVERS SEMICONDUCTORS AB | THAI BEVERAGE vs. Darden Restaurants | THAI BEVERAGE vs. Reliance Steel Aluminum | THAI BEVERAGE vs. Q2M Managementberatung AG |
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 Latest Portfolios module to quick portfolio dashboard that showcases your latest portfolios.
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