Correlation Between Royal Orchid and Thai Solar
Can any of the company-specific risk be diversified away by investing in both Royal Orchid and Thai Solar 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 Royal Orchid and Thai Solar into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Royal Orchid Hotel and Thai Solar Energy, you can compare the effects of market volatilities on Royal Orchid and Thai Solar 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 Royal Orchid with a short position of Thai Solar. Check out your portfolio center. Please also check ongoing floating volatility patterns of Royal Orchid and Thai Solar.
Diversification Opportunities for Royal Orchid and Thai Solar
0.81 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Royal and Thai is 0.81. Overlapping area represents the amount of risk that can be diversified away by holding Royal Orchid Hotel and Thai Solar Energy in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Thai Solar Energy and Royal Orchid 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 Royal Orchid Hotel are associated (or correlated) with Thai Solar. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Thai Solar Energy has no effect on the direction of Royal Orchid i.e., Royal Orchid and Thai Solar go up and down completely randomly.
Pair Corralation between Royal Orchid and Thai Solar
Assuming the 90 days trading horizon Royal Orchid Hotel is expected to generate 2.23 times more return on investment than Thai Solar. However, Royal Orchid is 2.23 times more volatile than Thai Solar Energy. It trades about 0.02 of its potential returns per unit of risk. Thai Solar Energy is currently generating about -0.23 per unit of risk. If you would invest 220.00 in Royal Orchid Hotel on September 1, 2024 and sell it today you would earn a total of 0.00 from holding Royal Orchid Hotel or generate 0.0% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 95.65% |
| Values | Daily Returns |
Royal Orchid Hotel vs. Thai Solar Energy
Performance |
| Timeline |
| Royal Orchid Hotel |
| Thai Solar Energy |
Royal Orchid and Thai Solar Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Royal Orchid and Thai Solar
The main advantage of trading using opposite Royal Orchid and Thai Solar positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Royal Orchid position performs unexpectedly, Thai Solar 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 Solar will offset losses from the drop in Thai Solar's long position.| Royal Orchid vs. OHTL Public | Royal Orchid vs. Laguna Resorts Hotels | Royal Orchid vs. Shangri La Hotel Public | Royal Orchid vs. Ramkhamhaeng Hospital Public |
| Thai Solar vs. Gunkul Engineering Public | Thai Solar vs. CK Power Public | Thai Solar vs. WHA Public | Thai Solar vs. Energy Absolute Public |
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 Balance Of Power module to check stock momentum by analyzing Balance Of Power indicator and other technical ratios.
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