Correlation Between THAI BEVERAGE and Patterson Companies
Can any of the company-specific risk be diversified away by investing in both THAI BEVERAGE and Patterson Companies 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 Patterson Companies into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between THAI BEVERAGE and Patterson Companies, you can compare the effects of market volatilities on THAI BEVERAGE and Patterson Companies 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 Patterson Companies. Check out your portfolio center. Please also check ongoing floating volatility patterns of THAI BEVERAGE and Patterson Companies.
Diversification Opportunities for THAI BEVERAGE and Patterson Companies
0.57 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between THAI and Patterson is 0.57. Overlapping area represents the amount of risk that can be diversified away by holding THAI BEVERAGE and Patterson Companies in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Patterson Companies 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 Patterson Companies. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Patterson Companies has no effect on the direction of THAI BEVERAGE i.e., THAI BEVERAGE and Patterson Companies go up and down completely randomly.
Pair Corralation between THAI BEVERAGE and Patterson Companies
Assuming the 90 days trading horizon THAI BEVERAGE is expected to generate 2.39 times more return on investment than Patterson Companies. However, THAI BEVERAGE is 2.39 times more volatile than Patterson Companies. It trades about 0.06 of its potential returns per unit of risk. Patterson Companies is currently generating about 0.0 per unit of risk. If you would invest 15.00 in THAI BEVERAGE on September 13, 2024 and sell it today you would earn a total of 24.00 from holding THAI BEVERAGE or generate 160.0% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
THAI BEVERAGE vs. Patterson Companies
Performance |
| Timeline |
| THAI BEVERAGE |
| Patterson Companies |
THAI BEVERAGE and Patterson Companies Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with THAI BEVERAGE and Patterson Companies
The main advantage of trading using opposite THAI BEVERAGE and Patterson Companies positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if THAI BEVERAGE position performs unexpectedly, Patterson Companies 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 Patterson Companies will offset losses from the drop in Patterson Companies' long position.| THAI BEVERAGE vs. Apple Inc | THAI BEVERAGE vs. Apple Inc | THAI BEVERAGE vs. Apple Inc | THAI BEVERAGE vs. Apple Inc |
| Patterson Companies vs. Methode Electronics | Patterson Companies vs. THAI BEVERAGE | Patterson Companies vs. ARROW ELECTRONICS | Patterson Companies vs. Monster Beverage Corp |
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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