Correlation Between THAI BEVERAGE and Naturgy Energy
Can any of the company-specific risk be diversified away by investing in both THAI BEVERAGE and Naturgy Energy 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 Naturgy Energy into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between THAI BEVERAGE and Naturgy Energy Group, you can compare the effects of market volatilities on THAI BEVERAGE and Naturgy Energy 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 Naturgy Energy. Check out your portfolio center. Please also check ongoing floating volatility patterns of THAI BEVERAGE and Naturgy Energy.
Diversification Opportunities for THAI BEVERAGE and Naturgy Energy
0.66 | Correlation Coefficient |
Poor diversification
The 3 months correlation between THAI and Naturgy is 0.66. Overlapping area represents the amount of risk that can be diversified away by holding THAI BEVERAGE and Naturgy Energy Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Naturgy Energy Group 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 Naturgy Energy. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Naturgy Energy Group has no effect on the direction of THAI BEVERAGE i.e., THAI BEVERAGE and Naturgy Energy go up and down completely randomly.
Pair Corralation between THAI BEVERAGE and Naturgy Energy
Assuming the 90 days trading horizon THAI BEVERAGE is expected to generate 3.35 times more return on investment than Naturgy Energy. However, THAI BEVERAGE is 3.35 times more volatile than Naturgy Energy Group. It trades about 0.06 of its potential returns per unit of risk. Naturgy Energy Group is currently generating about 0.01 per unit of risk. If you would invest 15.00 in THAI BEVERAGE on September 16, 2024 and sell it today you would earn a total of 23.00 from holding THAI BEVERAGE or generate 153.33% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
THAI BEVERAGE vs. Naturgy Energy Group
Performance |
| Timeline |
| THAI BEVERAGE |
| Naturgy Energy Group |
THAI BEVERAGE and Naturgy Energy Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with THAI BEVERAGE and Naturgy Energy
The main advantage of trading using opposite THAI BEVERAGE and Naturgy Energy positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if THAI BEVERAGE position performs unexpectedly, Naturgy Energy 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 Naturgy Energy will offset losses from the drop in Naturgy Energy's long position.| THAI BEVERAGE vs. Apple Inc | THAI BEVERAGE vs. Apple Inc | THAI BEVERAGE vs. Apple Inc | THAI BEVERAGE vs. Apple Inc |
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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 Insider Screener module to find insiders across different sectors to evaluate their impact on performance.
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