Correlation Between THAI BEVERAGE and Ulta Beauty
Can any of the company-specific risk be diversified away by investing in both THAI BEVERAGE and Ulta Beauty 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 Ulta Beauty into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between THAI BEVERAGE and Ulta Beauty, you can compare the effects of market volatilities on THAI BEVERAGE and Ulta Beauty 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 Ulta Beauty. Check out your portfolio center. Please also check ongoing floating volatility patterns of THAI BEVERAGE and Ulta Beauty.
Diversification Opportunities for THAI BEVERAGE and Ulta Beauty
0.49 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between THAI and Ulta is 0.49. Overlapping area represents the amount of risk that can be diversified away by holding THAI BEVERAGE and Ulta Beauty in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Ulta Beauty 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 Ulta Beauty. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Ulta Beauty has no effect on the direction of THAI BEVERAGE i.e., THAI BEVERAGE and Ulta Beauty go up and down completely randomly.
Pair Corralation between THAI BEVERAGE and Ulta Beauty
Assuming the 90 days trading horizon THAI BEVERAGE is expected to generate 2.26 times more return on investment than Ulta Beauty. However, THAI BEVERAGE is 2.26 times more volatile than Ulta Beauty. It trades about 0.05 of its potential returns per unit of risk. Ulta Beauty is currently generating about -0.01 per unit of risk. If you would invest 15.00 in THAI BEVERAGE on October 29, 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 | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
THAI BEVERAGE vs. Ulta Beauty
Performance |
| Timeline |
| THAI BEVERAGE |
| Ulta Beauty |
THAI BEVERAGE and Ulta Beauty Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with THAI BEVERAGE and Ulta Beauty
The main advantage of trading using opposite THAI BEVERAGE and Ulta Beauty positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if THAI BEVERAGE position performs unexpectedly, Ulta Beauty 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 Ulta Beauty will offset losses from the drop in Ulta Beauty's long position.| THAI BEVERAGE vs. TELECOM ITALIA | THAI BEVERAGE vs. GigaMedia | THAI BEVERAGE vs. QINGCI GAMES INC | THAI BEVERAGE vs. Cairo Communication SpA |
| Ulta Beauty vs. ePlay Digital | Ulta Beauty vs. ELMOS SEMICONDUCTOR | Ulta Beauty vs. Elmos Semiconductor SE | Ulta Beauty vs. Semiconductor Manufacturing International |
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 Odds Of Bankruptcy module to get analysis of equity chance of financial distress in the next 2 years.
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