Correlation Between THAI BEVERAGE and Vishay Intertechnology

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

Diversification Opportunities for THAI BEVERAGE and Vishay Intertechnology

0.67
  Correlation Coefficient

Poor diversification

The 3 months correlation between THAI and Vishay is 0.67. Overlapping area represents the amount of risk that can be diversified away by holding THAI BEVERAGE and Vishay Intertechnology in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Vishay Intertechnology 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 Vishay Intertechnology. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Vishay Intertechnology has no effect on the direction of THAI BEVERAGE i.e., THAI BEVERAGE and Vishay Intertechnology go up and down completely randomly.

Pair Corralation between THAI BEVERAGE and Vishay Intertechnology

Assuming the 90 days trading horizon THAI BEVERAGE is expected to under-perform the Vishay Intertechnology. But the stock apears to be less risky and, when comparing its historical volatility, THAI BEVERAGE is 1.16 times less risky than Vishay Intertechnology. The stock trades about -0.07 of its potential returns per unit of risk. The Vishay Intertechnology is currently generating about -0.05 of returns per unit of risk over similar time horizon. If you would invest  1,655  in Vishay Intertechnology on October 29, 2024 and sell it today you would lose (44.00) from holding Vishay Intertechnology or give up 2.66% of portfolio value over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthSignificant
Accuracy100.0%
ValuesDaily Returns

THAI BEVERAGE  vs.  Vishay Intertechnology

 Performance 
       Timeline  
THAI BEVERAGE 

Risk-Adjusted Performance

0 of 100

 
Weak
 
Strong
Very Weak
Over the last 90 days THAI BEVERAGE has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of rather sound basic indicators, THAI BEVERAGE is not utilizing all of its potentials. The newest stock price tumult, may contribute to shorter-term losses for the shareholders.
Vishay Intertechnology 

Risk-Adjusted Performance

1 of 100

 
Weak
 
Strong
Very Weak
Compared to the overall equity markets, risk-adjusted returns on investments in Vishay Intertechnology are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively stable basic indicators, Vishay Intertechnology is not utilizing all of its potentials. The current stock price uproar, may contribute to short-horizon losses for the private investors.

THAI BEVERAGE and Vishay Intertechnology Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with THAI BEVERAGE and Vishay Intertechnology

The main advantage of trading using opposite THAI BEVERAGE and Vishay Intertechnology positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if THAI BEVERAGE position performs unexpectedly, Vishay Intertechnology 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 Vishay Intertechnology will offset losses from the drop in Vishay Intertechnology's long position.
The idea behind THAI BEVERAGE and Vishay Intertechnology 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 Risk-Return Analysis module to view associations between returns expected from investment and the risk you assume.

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