Correlation Between THAI BEVERAGE and Beazer Homes
Can any of the company-specific risk be diversified away by investing in both THAI BEVERAGE and Beazer Homes 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 Beazer Homes into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between THAI BEVERAGE and Beazer Homes USA, you can compare the effects of market volatilities on THAI BEVERAGE and Beazer Homes 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 Beazer Homes. Check out your portfolio center. Please also check ongoing floating volatility patterns of THAI BEVERAGE and Beazer Homes.
Diversification Opportunities for THAI BEVERAGE and Beazer Homes
0.7 | Correlation Coefficient |
Poor diversification
The 3 months correlation between THAI and Beazer is 0.7. Overlapping area represents the amount of risk that can be diversified away by holding THAI BEVERAGE and Beazer Homes USA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Beazer Homes USA 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 Beazer Homes. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Beazer Homes USA has no effect on the direction of THAI BEVERAGE i.e., THAI BEVERAGE and Beazer Homes go up and down completely randomly.
Pair Corralation between THAI BEVERAGE and Beazer Homes
Assuming the 90 days trading horizon THAI BEVERAGE is expected to generate 0.62 times more return on investment than Beazer Homes. However, THAI BEVERAGE is 1.61 times less risky than Beazer Homes. It trades about 0.0 of its potential returns per unit of risk. Beazer Homes USA is currently generating about -0.02 per unit of risk. If you would invest 35.00 in THAI BEVERAGE on January 10, 2025 and sell it today you would lose (4.00) from holding THAI BEVERAGE or give up 11.43% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
THAI BEVERAGE vs. Beazer Homes USA
Performance |
| Timeline |
| THAI BEVERAGE |
| Beazer Homes USA |
THAI BEVERAGE and Beazer Homes Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with THAI BEVERAGE and Beazer Homes
The main advantage of trading using opposite THAI BEVERAGE and Beazer Homes positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if THAI BEVERAGE position performs unexpectedly, Beazer Homes 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 Beazer Homes will offset losses from the drop in Beazer Homes' long position.| THAI BEVERAGE vs. FORMPIPE SOFTWARE AB | THAI BEVERAGE vs. COLUMBIA SPORTSWEAR | THAI BEVERAGE vs. OPERA SOFTWARE | THAI BEVERAGE vs. COGNYTE SOFTWARE LTD |
| Beazer Homes vs. MOVIE GAMES SA | Beazer Homes vs. FRACTAL GAMING GROUP | Beazer Homes vs. IMPERIAL TOBACCO | Beazer Homes vs. QUBICGAMES SA ZY |
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 Price Ceiling Movement module to calculate and plot Price Ceiling Movement for different equity instruments.
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