Correlation Between STMICROELECTRONICS and THAI BEVERAGE
Can any of the company-specific risk be diversified away by investing in both STMICROELECTRONICS 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 STMICROELECTRONICS and THAI BEVERAGE into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between STMICROELECTRONICS and THAI BEVERAGE, you can compare the effects of market volatilities on STMICROELECTRONICS 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 STMICROELECTRONICS with a short position of THAI BEVERAGE. Check out your portfolio center. Please also check ongoing floating volatility patterns of STMICROELECTRONICS and THAI BEVERAGE.
Diversification Opportunities for STMICROELECTRONICS and THAI BEVERAGE
-0.1 | Correlation Coefficient |
Good diversification
The 3 months correlation between STMICROELECTRONICS and THAI is -0.1. Overlapping area represents the amount of risk that can be diversified away by holding STMICROELECTRONICS and THAI BEVERAGE in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on THAI BEVERAGE and STMICROELECTRONICS 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 STMICROELECTRONICS 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 STMICROELECTRONICS i.e., STMICROELECTRONICS and THAI BEVERAGE go up and down completely randomly.
Pair Corralation between STMICROELECTRONICS and THAI BEVERAGE
Assuming the 90 days trading horizon STMICROELECTRONICS is expected to generate 1.11 times more return on investment than THAI BEVERAGE. However, STMICROELECTRONICS is 1.11 times more volatile than THAI BEVERAGE. It trades about 0.02 of its potential returns per unit of risk. THAI BEVERAGE is currently generating about -0.1 per unit of risk. If you would invest 2,359 in STMICROELECTRONICS on October 30, 2024 and sell it today you would earn a total of 21.00 from holding STMICROELECTRONICS or generate 0.89% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
STMICROELECTRONICS vs. THAI BEVERAGE
Performance |
| Timeline |
| STMICROELECTRONICS |
| THAI BEVERAGE |
STMICROELECTRONICS and THAI BEVERAGE Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with STMICROELECTRONICS and THAI BEVERAGE
The main advantage of trading using opposite STMICROELECTRONICS and THAI BEVERAGE positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if STMICROELECTRONICS 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.| STMICROELECTRONICS vs. Corsair Gaming | STMICROELECTRONICS vs. Mitsui Chemicals | STMICROELECTRONICS vs. KINGBOARD CHEMICAL | STMICROELECTRONICS vs. AIR PRODCHEMICALS |
| THAI BEVERAGE vs. MOVIE GAMES SA | THAI BEVERAGE vs. TAL Education Group | THAI BEVERAGE vs. TEN SQUARE GAMES | THAI BEVERAGE vs. EEDUCATION ALBERT AB |
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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