Correlation Between THAI BEVERAGE and CARSALESCOM
Can any of the company-specific risk be diversified away by investing in both THAI BEVERAGE and CARSALESCOM 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 CARSALESCOM into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between THAI BEVERAGE and CARSALESCOM, you can compare the effects of market volatilities on THAI BEVERAGE and CARSALESCOM 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 CARSALESCOM. Check out your portfolio center. Please also check ongoing floating volatility patterns of THAI BEVERAGE and CARSALESCOM.
Diversification Opportunities for THAI BEVERAGE and CARSALESCOM
0.41 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between THAI and CARSALESCOM is 0.41. Overlapping area represents the amount of risk that can be diversified away by holding THAI BEVERAGE and CARSALESCOM in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on CARSALESCOM 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 CARSALESCOM. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of CARSALESCOM has no effect on the direction of THAI BEVERAGE i.e., THAI BEVERAGE and CARSALESCOM go up and down completely randomly.
Pair Corralation between THAI BEVERAGE and CARSALESCOM
Assuming the 90 days trading horizon THAI BEVERAGE is expected to generate 3.19 times more return on investment than CARSALESCOM. However, THAI BEVERAGE is 3.19 times more volatile than CARSALESCOM. It trades about 0.07 of its potential returns per unit of risk. CARSALESCOM is currently generating about 0.09 per unit of risk. If you would invest 19.00 in THAI BEVERAGE on September 14, 2024 and sell it today you would earn a total of 19.00 from holding THAI BEVERAGE or generate 100.0% 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. CARSALESCOM
Performance |
| Timeline |
| THAI BEVERAGE |
| CARSALESCOM |
THAI BEVERAGE and CARSALESCOM Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with THAI BEVERAGE and CARSALESCOM
The main advantage of trading using opposite THAI BEVERAGE and CARSALESCOM positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if THAI BEVERAGE position performs unexpectedly, CARSALESCOM 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 CARSALESCOM will offset losses from the drop in CARSALESCOM's long position.| THAI BEVERAGE vs. Apple Inc | THAI BEVERAGE vs. Apple Inc | THAI BEVERAGE vs. Apple Inc | THAI BEVERAGE vs. Apple Inc |
| CARSALESCOM vs. Apple Inc | CARSALESCOM vs. Apple Inc | CARSALESCOM vs. Apple Inc | CARSALESCOM vs. Apple Inc |
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 Volatility Analysis module to get historical volatility and risk analysis based on latest market data.
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