Correlation Between Regional Container and Thai Rung
Can any of the company-specific risk be diversified away by investing in both Regional Container and Thai Rung 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 Regional Container and Thai Rung into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Regional Container Lines and Thai Rung Union, you can compare the effects of market volatilities on Regional Container and Thai Rung 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 Regional Container with a short position of Thai Rung. Check out your portfolio center. Please also check ongoing floating volatility patterns of Regional Container and Thai Rung.
Diversification Opportunities for Regional Container and Thai Rung
0.64 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Regional and Thai is 0.64. Overlapping area represents the amount of risk that can be diversified away by holding Regional Container Lines and Thai Rung Union in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Thai Rung Union and Regional Container 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 Regional Container Lines are associated (or correlated) with Thai Rung. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Thai Rung Union has no effect on the direction of Regional Container i.e., Regional Container and Thai Rung go up and down completely randomly.
Pair Corralation between Regional Container and Thai Rung
Assuming the 90 days trading horizon Regional Container Lines is expected to generate 1.41 times more return on investment than Thai Rung. However, Regional Container is 1.41 times more volatile than Thai Rung Union. It trades about 0.1 of its potential returns per unit of risk. Thai Rung Union is currently generating about 0.07 per unit of risk. If you would invest 2,408 in Regional Container Lines on September 3, 2024 and sell it today you would earn a total of 417.00 from holding Regional Container Lines or generate 17.32% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Regional Container Lines vs. Thai Rung Union
Performance |
| Timeline |
| Regional Container Lines |
| Thai Rung Union |
Regional Container and Thai Rung Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Regional Container and Thai Rung
The main advantage of trading using opposite Regional Container and Thai Rung positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Regional Container position performs unexpectedly, Thai Rung 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 Rung will offset losses from the drop in Thai Rung's long position.| Regional Container vs. Sun Vending Technology | Regional Container vs. Sri panwa Hospitality | Regional Container vs. Bumrungrad Hospital Public | Regional Container vs. Bioscience Animal Health |
| Thai Rung vs. Central Pattana Public | Thai Rung vs. CP ALL Public | Thai Rung vs. Bangkok Dusit Medical | Thai Rung vs. Airports of Thailand |
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 Performance Analysis module to check effects of mean-variance optimization against your current asset allocation.
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