Correlation Between THAI BEVERAGE and PSI Software

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Can any of the company-specific risk be diversified away by investing in both THAI BEVERAGE and PSI Software 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 PSI Software into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between THAI BEVERAGE and PSI Software AG, you can compare the effects of market volatilities on THAI BEVERAGE and PSI Software 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 PSI Software. Check out your portfolio center. Please also check ongoing floating volatility patterns of THAI BEVERAGE and PSI Software.

Diversification Opportunities for THAI BEVERAGE and PSI Software

0.33
  Correlation Coefficient

Weak diversification

The 3 months correlation between THAI and PSI is 0.33. Overlapping area represents the amount of risk that can be diversified away by holding THAI BEVERAGE and PSI Software AG in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on PSI Software AG 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 PSI Software. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of PSI Software AG has no effect on the direction of THAI BEVERAGE i.e., THAI BEVERAGE and PSI Software go up and down completely randomly.

Pair Corralation between THAI BEVERAGE and PSI Software

Assuming the 90 days trading horizon THAI BEVERAGE is expected to generate 2.06 times more return on investment than PSI Software. However, THAI BEVERAGE is 2.06 times more volatile than PSI Software AG. It trades about 0.14 of its potential returns per unit of risk. PSI Software AG is currently generating about -0.07 per unit of risk. If you would invest  35.00  in THAI BEVERAGE on August 29, 2024 and sell it today you would earn a total of  3.00  from holding THAI BEVERAGE or generate 8.57% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthVery Weak
Accuracy95.65%
ValuesDaily Returns

THAI BEVERAGE  vs.  PSI Software AG

 Performance 
       Timeline  
THAI BEVERAGE 

Risk-Adjusted Performance

3 of 100

 
Weak
 
Strong
Insignificant
Compared to the overall equity markets, risk-adjusted returns on investments in THAI BEVERAGE are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. In spite of rather uncertain basic indicators, THAI BEVERAGE may actually be approaching a critical reversion point that can send shares even higher in December 2024.
PSI Software AG 

Risk-Adjusted Performance

5 of 100

 
Weak
 
Strong
Modest
Compared to the overall equity markets, risk-adjusted returns on investments in PSI Software AG are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. In spite of rather sound basic indicators, PSI Software is not utilizing all of its potentials. The newest stock price tumult, may contribute to shorter-term losses for the shareholders.

THAI BEVERAGE and PSI Software Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with THAI BEVERAGE and PSI Software

The main advantage of trading using opposite THAI BEVERAGE and PSI Software positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if THAI BEVERAGE position performs unexpectedly, PSI Software 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 PSI Software will offset losses from the drop in PSI Software's long position.
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The idea behind THAI BEVERAGE and PSI Software AG pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.
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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 USA ETFs module to find actively traded Exchange Traded Funds (ETF) in USA.

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