Correlation Between THAI BEVERAGE and SINGAPORE AIRLINES
Can any of the company-specific risk be diversified away by investing in both THAI BEVERAGE and SINGAPORE AIRLINES 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 SINGAPORE AIRLINES into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between THAI BEVERAGE and SINGAPORE AIRLINES, you can compare the effects of market volatilities on THAI BEVERAGE and SINGAPORE AIRLINES 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 SINGAPORE AIRLINES. Check out your portfolio center. Please also check ongoing floating volatility patterns of THAI BEVERAGE and SINGAPORE AIRLINES.
Diversification Opportunities for THAI BEVERAGE and SINGAPORE AIRLINES
0.56 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between THAI and SINGAPORE is 0.56. Overlapping area represents the amount of risk that can be diversified away by holding THAI BEVERAGE and SINGAPORE AIRLINES in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SINGAPORE AIRLINES 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 SINGAPORE AIRLINES. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of SINGAPORE AIRLINES has no effect on the direction of THAI BEVERAGE i.e., THAI BEVERAGE and SINGAPORE AIRLINES go up and down completely randomly.
Pair Corralation between THAI BEVERAGE and SINGAPORE AIRLINES
Assuming the 90 days trading horizon THAI BEVERAGE is expected to generate 2.2 times more return on investment than SINGAPORE AIRLINES. However, THAI BEVERAGE is 2.2 times more volatile than SINGAPORE AIRLINES. It trades about 0.01 of its potential returns per unit of risk. SINGAPORE AIRLINES is currently generating about -0.13 per unit of risk. If you would invest 37.00 in THAI BEVERAGE on October 26, 2024 and sell it today you would earn a total of 0.00 from holding THAI BEVERAGE or generate 0.0% 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. SINGAPORE AIRLINES
Performance |
| Timeline |
| THAI BEVERAGE |
| SINGAPORE AIRLINES |
THAI BEVERAGE and SINGAPORE AIRLINES Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with THAI BEVERAGE and SINGAPORE AIRLINES
The main advantage of trading using opposite THAI BEVERAGE and SINGAPORE AIRLINES positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if THAI BEVERAGE position performs unexpectedly, SINGAPORE AIRLINES 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 SINGAPORE AIRLINES will offset losses from the drop in SINGAPORE AIRLINES's long position.| THAI BEVERAGE vs. Hitachi Construction Machinery | THAI BEVERAGE vs. WESANA HEALTH HOLD | THAI BEVERAGE vs. Scandinavian Tobacco Group | THAI BEVERAGE vs. Sumitomo Mitsui Construction |
| SINGAPORE AIRLINES vs. New Residential Investment | SINGAPORE AIRLINES vs. STGEORGE MINING LTD | SINGAPORE AIRLINES vs. Japan Asia Investment | SINGAPORE AIRLINES vs. Apollo Investment 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 Risk-Return Analysis module to view associations between returns expected from investment and the risk you assume.
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