Correlation Between THAI BEVERAGE and China Communications
Can any of the company-specific risk be diversified away by investing in both THAI BEVERAGE and China Communications 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 China Communications into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between THAI BEVERAGE and China Communications Services, you can compare the effects of market volatilities on THAI BEVERAGE and China Communications 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 China Communications. Check out your portfolio center. Please also check ongoing floating volatility patterns of THAI BEVERAGE and China Communications.
Diversification Opportunities for THAI BEVERAGE and China Communications
0.31 | Correlation Coefficient |
Weak diversification
The 3 months correlation between THAI and China is 0.31. Overlapping area represents the amount of risk that can be diversified away by holding THAI BEVERAGE and China Communications Services in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on China Communications 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 China Communications. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of China Communications has no effect on the direction of THAI BEVERAGE i.e., THAI BEVERAGE and China Communications go up and down completely randomly.
Pair Corralation between THAI BEVERAGE and China Communications
Assuming the 90 days trading horizon THAI BEVERAGE is expected to generate 1.68 times more return on investment than China Communications. However, THAI BEVERAGE is 1.68 times more volatile than China Communications Services. It trades about 0.22 of its potential returns per unit of risk. China Communications Services is currently generating about 0.01 per unit of risk. If you would invest 35.00 in THAI BEVERAGE on September 3, 2024 and sell it today you would earn a total of 4.00 from holding THAI BEVERAGE or generate 11.43% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
THAI BEVERAGE vs. China Communications Services
Performance |
| Timeline |
| THAI BEVERAGE |
| China Communications |
THAI BEVERAGE and China Communications Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with THAI BEVERAGE and China Communications
The main advantage of trading using opposite THAI BEVERAGE and China Communications positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if THAI BEVERAGE position performs unexpectedly, China Communications 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 China Communications will offset losses from the drop in China Communications' long position.| THAI BEVERAGE vs. Ramsay Health Care | THAI BEVERAGE vs. National Health Investors | THAI BEVERAGE vs. Air Transport Services | THAI BEVERAGE vs. Texas Roadhouse |
| China Communications vs. T Mobile | China Communications vs. China Mobile Limited | China Communications vs. ATT Inc | China Communications vs. Nippon Telegraph and |
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 Watchlist Optimization module to optimize watchlists to build efficient portfolios or rebalance existing positions based on the mean-variance optimization algorithm.
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