Correlation Between THAI BEVERAGE and MedMira
Can any of the company-specific risk be diversified away by investing in both THAI BEVERAGE and MedMira 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 MedMira into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between THAI BEVERAGE and MedMira, you can compare the effects of market volatilities on THAI BEVERAGE and MedMira 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 MedMira. Check out your portfolio center. Please also check ongoing floating volatility patterns of THAI BEVERAGE and MedMira.
Diversification Opportunities for THAI BEVERAGE and MedMira
-0.06 | Correlation Coefficient |
Good diversification
The 3 months correlation between THAI and MedMira is -0.06. Overlapping area represents the amount of risk that can be diversified away by holding THAI BEVERAGE and MedMira in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on MedMira 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 MedMira. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of MedMira has no effect on the direction of THAI BEVERAGE i.e., THAI BEVERAGE and MedMira go up and down completely randomly.
Pair Corralation between THAI BEVERAGE and MedMira
Assuming the 90 days trading horizon THAI BEVERAGE is expected to generate 1.49 times less return on investment than MedMira. But when comparing it to its historical volatility, THAI BEVERAGE is 1.9 times less risky than MedMira. It trades about 0.05 of its potential returns per unit of risk. MedMira is currently generating about 0.04 of returns per unit of risk over similar time horizon. If you would invest 4.65 in MedMira on September 12, 2024 and sell it today you would earn a total of 0.35 from holding MedMira or generate 7.53% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
THAI BEVERAGE vs. MedMira
Performance |
| Timeline |
| THAI BEVERAGE |
| MedMira |
THAI BEVERAGE and MedMira Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with THAI BEVERAGE and MedMira
The main advantage of trading using opposite THAI BEVERAGE and MedMira positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if THAI BEVERAGE position performs unexpectedly, MedMira 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 MedMira will offset losses from the drop in MedMira's long position.| THAI BEVERAGE vs. Apple Inc | THAI BEVERAGE vs. Apple Inc | THAI BEVERAGE vs. Apple Inc | THAI BEVERAGE vs. Apple Inc |
| MedMira vs. Nordic Semiconductor ASA | MedMira vs. Lion One Metals | MedMira vs. BE Semiconductor Industries | MedMira vs. CVW CLEANTECH INC |
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 Idea Analyzer module to analyze all characteristics, volatility and risk-adjusted return of Macroaxis ideas.
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