Correlation Between THAI BEVERAGE and Pearson Plc
Can any of the company-specific risk be diversified away by investing in both THAI BEVERAGE and Pearson Plc 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 Pearson Plc into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between THAI BEVERAGE and Pearson plc, you can compare the effects of market volatilities on THAI BEVERAGE and Pearson Plc 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 Pearson Plc. Check out your portfolio center. Please also check ongoing floating volatility patterns of THAI BEVERAGE and Pearson Plc.
Diversification Opportunities for THAI BEVERAGE and Pearson Plc
0.44 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between THAI and Pearson is 0.44. Overlapping area represents the amount of risk that can be diversified away by holding THAI BEVERAGE and Pearson plc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Pearson plc 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 Pearson Plc. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Pearson plc has no effect on the direction of THAI BEVERAGE i.e., THAI BEVERAGE and Pearson Plc go up and down completely randomly.
Pair Corralation between THAI BEVERAGE and Pearson Plc
Assuming the 90 days trading horizon THAI BEVERAGE is expected to generate 1.18 times less return on investment than Pearson Plc. In addition to that, THAI BEVERAGE is 2.31 times more volatile than Pearson plc. It trades about 0.11 of its total potential returns per unit of risk. Pearson plc is currently generating about 0.31 per unit of volatility. If you would invest 1,434 in Pearson plc on September 17, 2024 and sell it today you would earn a total of 104.00 from holding Pearson plc or generate 7.25% 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. Pearson plc
Performance |
| Timeline |
| THAI BEVERAGE |
| Pearson plc |
THAI BEVERAGE and Pearson Plc Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with THAI BEVERAGE and Pearson Plc
The main advantage of trading using opposite THAI BEVERAGE and Pearson Plc positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if THAI BEVERAGE position performs unexpectedly, Pearson Plc 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 Pearson Plc will offset losses from the drop in Pearson Plc's long position.| THAI BEVERAGE vs. Apple Inc | THAI BEVERAGE vs. Apple Inc | THAI BEVERAGE vs. Apple Inc | THAI BEVERAGE vs. Apple Inc |
| Pearson Plc vs. SCANSOURCE | Pearson Plc vs. THAI BEVERAGE | Pearson Plc vs. PREMIER FOODS | Pearson Plc 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 Equity Search module to search for actively traded equities including funds and ETFs from over 30 global markets.
Other Complementary Tools
| Money Managers Screen money managers from public funds and ETFs managed around the world | |
| Portfolio Volatility Check portfolio volatility and analyze historical return density to properly model market risk | |
| Commodity Channel Use Commodity Channel Index to analyze current equity momentum | |
| Pair Correlation Compare performance and examine fundamental relationship between any two equity instruments | |
| Portfolio Backtesting Avoid under-diversification and over-optimization by backtesting your portfolios |