Correlation Between Pacific Pipe and Thantawan Industry
Can any of the company-specific risk be diversified away by investing in both Pacific Pipe and Thantawan Industry 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 Pacific Pipe and Thantawan Industry into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Pacific Pipe Public and Thantawan Industry Public, you can compare the effects of market volatilities on Pacific Pipe and Thantawan Industry 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 Pacific Pipe with a short position of Thantawan Industry. Check out your portfolio center. Please also check ongoing floating volatility patterns of Pacific Pipe and Thantawan Industry.
Diversification Opportunities for Pacific Pipe and Thantawan Industry
0.65 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Pacific and Thantawan is 0.65. Overlapping area represents the amount of risk that can be diversified away by holding Pacific Pipe Public and Thantawan Industry Public in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Thantawan Industry Public and Pacific Pipe 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 Pacific Pipe Public are associated (or correlated) with Thantawan Industry. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Thantawan Industry Public has no effect on the direction of Pacific Pipe i.e., Pacific Pipe and Thantawan Industry go up and down completely randomly.
Pair Corralation between Pacific Pipe and Thantawan Industry
Assuming the 90 days trading horizon Pacific Pipe Public is expected to under-perform the Thantawan Industry. In addition to that, Pacific Pipe is 2.8 times more volatile than Thantawan Industry Public. It trades about -0.23 of its total potential returns per unit of risk. Thantawan Industry Public is currently generating about -0.05 per unit of volatility. If you would invest 2,925 in Thantawan Industry Public on September 13, 2024 and sell it today you would lose (25.00) from holding Thantawan Industry Public or give up 0.85% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Pacific Pipe Public vs. Thantawan Industry Public
Performance |
| Timeline |
| Pacific Pipe Public |
| Thantawan Industry Public |
Pacific Pipe and Thantawan Industry Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Pacific Pipe and Thantawan Industry
The main advantage of trading using opposite Pacific Pipe and Thantawan Industry positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Pacific Pipe position performs unexpectedly, Thantawan Industry 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 Thantawan Industry will offset losses from the drop in Thantawan Industry's long position.| Pacific Pipe vs. Thantawan Industry Public | Pacific Pipe vs. The Erawan Group | Pacific Pipe vs. Jay Mart Public | Pacific Pipe vs. Airports of Thailand |
| Thantawan Industry vs. The Erawan Group | Thantawan Industry vs. Jay Mart Public | Thantawan Industry vs. Airports of Thailand | Thantawan Industry vs. Eastern Technical Engineering |
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 Stocks Directory module to find actively traded stocks across global markets.
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