Correlation Between THAI BEVERAGE and Archer Daniels
Can any of the company-specific risk be diversified away by investing in both THAI BEVERAGE and Archer Daniels 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 Archer Daniels into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between THAI BEVERAGE and Archer Daniels Midland, you can compare the effects of market volatilities on THAI BEVERAGE and Archer Daniels 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 Archer Daniels. Check out your portfolio center. Please also check ongoing floating volatility patterns of THAI BEVERAGE and Archer Daniels.
Diversification Opportunities for THAI BEVERAGE and Archer Daniels
0.11 | Correlation Coefficient |
Average diversification
The 3 months correlation between THAI and Archer is 0.11. Overlapping area represents the amount of risk that can be diversified away by holding THAI BEVERAGE and Archer Daniels Midland in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Archer Daniels Midland 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 Archer Daniels. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Archer Daniels Midland has no effect on the direction of THAI BEVERAGE i.e., THAI BEVERAGE and Archer Daniels go up and down completely randomly.
Pair Corralation between THAI BEVERAGE and Archer Daniels
Assuming the 90 days trading horizon THAI BEVERAGE is expected to generate 2.08 times more return on investment than Archer Daniels. However, THAI BEVERAGE is 2.08 times more volatile than Archer Daniels Midland. It trades about 0.08 of its potential returns per unit of risk. Archer Daniels Midland is currently generating about -0.04 per unit of risk. If you would invest 35.00 in THAI BEVERAGE on October 11, 2024 and sell it today you would earn a total of 2.00 from holding THAI BEVERAGE or generate 5.71% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
THAI BEVERAGE vs. Archer Daniels Midland
Performance |
| Timeline |
| THAI BEVERAGE |
| Archer Daniels Midland |
THAI BEVERAGE and Archer Daniels Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with THAI BEVERAGE and Archer Daniels
The main advantage of trading using opposite THAI BEVERAGE and Archer Daniels positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if THAI BEVERAGE position performs unexpectedly, Archer Daniels 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 Archer Daniels will offset losses from the drop in Archer Daniels' long position.| THAI BEVERAGE vs. TRAVEL LEISURE DL 01 | THAI BEVERAGE vs. Ebro Foods SA | THAI BEVERAGE vs. PLAYTIKA HOLDING DL 01 | THAI BEVERAGE vs. TYSON FOODS A |
| Archer Daniels vs. Benchmark Electronics | Archer Daniels vs. Methode Electronics | Archer Daniels vs. CVW CLEANTECH INC | Archer Daniels vs. Renesas Electronics |
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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