Correlation Between Reinsurance Group and Internet Thailand
Can any of the company-specific risk be diversified away by investing in both Reinsurance Group and Internet Thailand 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 Reinsurance Group and Internet Thailand into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Reinsurance Group of and Internet Thailand PCL, you can compare the effects of market volatilities on Reinsurance Group and Internet Thailand 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 Reinsurance Group with a short position of Internet Thailand. Check out your portfolio center. Please also check ongoing floating volatility patterns of Reinsurance Group and Internet Thailand.
Diversification Opportunities for Reinsurance Group and Internet Thailand
-0.16 | Correlation Coefficient |
Good diversification
The 3 months correlation between Reinsurance and Internet is -0.16. Overlapping area represents the amount of risk that can be diversified away by holding Reinsurance Group of and Internet Thailand PCL in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Internet Thailand PCL and Reinsurance Group 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 Reinsurance Group of are associated (or correlated) with Internet Thailand. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Internet Thailand PCL has no effect on the direction of Reinsurance Group i.e., Reinsurance Group and Internet Thailand go up and down completely randomly.
Pair Corralation between Reinsurance Group and Internet Thailand
Assuming the 90 days trading horizon Reinsurance Group of is expected to under-perform the Internet Thailand. But the stock apears to be less risky and, when comparing its historical volatility, Reinsurance Group of is 1.8 times less risky than Internet Thailand. The stock trades about -0.18 of its potential returns per unit of risk. The Internet Thailand PCL is currently generating about -0.03 of returns per unit of risk over similar time horizon. If you would invest 17.00 in Internet Thailand PCL on November 28, 2024 and sell it today you would lose (1.00) from holding Internet Thailand PCL or give up 5.88% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 95.65% |
| Values | Daily Returns |
Reinsurance Group of vs. Internet Thailand PCL
Performance |
| Timeline |
| Reinsurance Group |
| Internet Thailand PCL |
Reinsurance Group and Internet Thailand Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Reinsurance Group and Internet Thailand
The main advantage of trading using opposite Reinsurance Group and Internet Thailand positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Reinsurance Group position performs unexpectedly, Internet Thailand 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 Internet Thailand will offset losses from the drop in Internet Thailand's long position.The idea behind Reinsurance Group of and Internet Thailand PCL 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.
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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 ETF Categories module to list of ETF categories grouped based on various criteria, such as the investment strategy or type of investments.
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