Correlation Between SMA Solar and THAI BEVERAGE
Can any of the company-specific risk be diversified away by investing in both SMA Solar 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 SMA Solar and THAI BEVERAGE into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between SMA Solar Technology and THAI BEVERAGE, you can compare the effects of market volatilities on SMA Solar 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 SMA Solar with a short position of THAI BEVERAGE. Check out your portfolio center. Please also check ongoing floating volatility patterns of SMA Solar and THAI BEVERAGE.
Diversification Opportunities for SMA Solar and THAI BEVERAGE
-0.08 | Correlation Coefficient |
Good diversification
The 3 months correlation between SMA and THAI is -0.08. Overlapping area represents the amount of risk that can be diversified away by holding SMA Solar Technology and THAI BEVERAGE in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on THAI BEVERAGE and SMA Solar 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 SMA Solar Technology 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 SMA Solar i.e., SMA Solar and THAI BEVERAGE go up and down completely randomly.
Pair Corralation between SMA Solar and THAI BEVERAGE
Assuming the 90 days horizon SMA Solar Technology is expected to generate 1.99 times more return on investment than THAI BEVERAGE. However, SMA Solar is 1.99 times more volatile than THAI BEVERAGE. It trades about 0.14 of its potential returns per unit of risk. THAI BEVERAGE is currently generating about 0.01 per unit of risk. If you would invest 1,259 in SMA Solar Technology on October 19, 2024 and sell it today you would earn a total of 298.00 from holding SMA Solar Technology or generate 23.67% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
SMA Solar Technology vs. THAI BEVERAGE
Performance |
| Timeline |
| SMA Solar Technology |
| THAI BEVERAGE |
SMA Solar and THAI BEVERAGE Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with SMA Solar and THAI BEVERAGE
The main advantage of trading using opposite SMA Solar and THAI BEVERAGE positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if SMA Solar 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.| SMA Solar vs. Tradegate AG Wertpapierhandelsbank | SMA Solar vs. Martin Marietta Materials | SMA Solar vs. Applied Materials | SMA Solar vs. Summit Materials |
| THAI BEVERAGE vs. Waste Management | THAI BEVERAGE vs. Vulcan Materials | THAI BEVERAGE vs. Sumitomo Rubber Industries | THAI BEVERAGE vs. CeoTronics 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 Portfolio Center module to all portfolio management and optimization tools to improve performance of your portfolios.
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