Correlation Between THAI BEVERAGE and High Liner
Can any of the company-specific risk be diversified away by investing in both THAI BEVERAGE and High Liner 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 THAI BEVERAGE and High Liner into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between THAI BEVERAGE and High Liner Foods, you can compare the effects of market volatilities on THAI BEVERAGE and High Liner 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 THAI BEVERAGE with a short position of High Liner. Check out your portfolio center. Please also check ongoing floating volatility patterns of THAI BEVERAGE and High Liner.
Diversification Opportunities for THAI BEVERAGE and High Liner
0.68 | Correlation Coefficient |
Poor diversification
The 3 months correlation between THAI and High is 0.68. Overlapping area represents the amount of risk that can be diversified away by holding THAI BEVERAGE and High Liner Foods in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on High Liner Foods and THAI BEVERAGE 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 THAI BEVERAGE are associated (or correlated) with High Liner. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of High Liner Foods has no effect on the direction of THAI BEVERAGE i.e., THAI BEVERAGE and High Liner go up and down completely randomly.
Pair Corralation between THAI BEVERAGE and High Liner
Assuming the 90 days trading horizon THAI BEVERAGE is expected to generate 2.65 times more return on investment than High Liner. However, THAI BEVERAGE is 2.65 times more volatile than High Liner Foods. It trades about 0.05 of its potential returns per unit of risk. High Liner Foods is currently generating about 0.03 per unit of risk. If you would invest 15.00 in THAI BEVERAGE on October 28, 2024 and sell it today you would earn a total of 21.00 from holding THAI BEVERAGE or generate 140.0% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
THAI BEVERAGE vs. High Liner Foods
Performance |
| Timeline |
| THAI BEVERAGE |
| High Liner Foods |
THAI BEVERAGE and High Liner Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with THAI BEVERAGE and High Liner
The main advantage of trading using opposite THAI BEVERAGE and High Liner positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if THAI BEVERAGE position performs unexpectedly, High Liner 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 High Liner will offset losses from the drop in High Liner's long position.| THAI BEVERAGE vs. Apple Inc | THAI BEVERAGE vs. Apple Inc | THAI BEVERAGE vs. Apple Inc | THAI BEVERAGE vs. Apple Inc |
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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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