Correlation Between THAI BEVERAGE and Reliance Steel
Can any of the company-specific risk be diversified away by investing in both THAI BEVERAGE and Reliance Steel 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 Reliance Steel into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between THAI BEVERAGE and Reliance Steel Aluminum, you can compare the effects of market volatilities on THAI BEVERAGE and Reliance Steel 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 Reliance Steel. Check out your portfolio center. Please also check ongoing floating volatility patterns of THAI BEVERAGE and Reliance Steel.
Diversification Opportunities for THAI BEVERAGE and Reliance Steel
0.52 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between THAI and Reliance is 0.52. Overlapping area represents the amount of risk that can be diversified away by holding THAI BEVERAGE and Reliance Steel Aluminum in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Reliance Steel Aluminum 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 Reliance Steel. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Reliance Steel Aluminum has no effect on the direction of THAI BEVERAGE i.e., THAI BEVERAGE and Reliance Steel go up and down completely randomly.
Pair Corralation between THAI BEVERAGE and Reliance Steel
Assuming the 90 days trading horizon THAI BEVERAGE is expected to generate 2.45 times more return on investment than Reliance Steel. However, THAI BEVERAGE is 2.45 times more volatile than Reliance Steel Aluminum. It trades about 0.11 of its potential returns per unit of risk. Reliance Steel Aluminum is currently generating about -0.11 per unit of risk. If you would invest 36.00 in THAI BEVERAGE on September 14, 2024 and sell it today you would earn a total of 2.00 from holding THAI BEVERAGE or generate 5.56% 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. Reliance Steel Aluminum
Performance |
| Timeline |
| THAI BEVERAGE |
| Reliance Steel Aluminum |
THAI BEVERAGE and Reliance Steel Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with THAI BEVERAGE and Reliance Steel
The main advantage of trading using opposite THAI BEVERAGE and Reliance Steel positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if THAI BEVERAGE position performs unexpectedly, Reliance Steel 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 Reliance Steel will offset losses from the drop in Reliance Steel's long position.| THAI BEVERAGE vs. Apple Inc | THAI BEVERAGE vs. Apple Inc | THAI BEVERAGE vs. Apple Inc | THAI BEVERAGE vs. Apple Inc |
| Reliance Steel vs. HYATT HOTELS A | Reliance Steel vs. Host Hotels Resorts | Reliance Steel vs. Games Workshop Group | Reliance Steel vs. INTERCONT HOTELS |
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 Money Flow Index module to determine momentum by analyzing Money Flow Index and other technical indicators.
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