Correlation Between Thai Beverage and WisdomTree Investments
Can any of the company-specific risk be diversified away by investing in both Thai Beverage and WisdomTree Investments 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 WisdomTree Investments into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Thai Beverage Public and WisdomTree Investments, you can compare the effects of market volatilities on Thai Beverage and WisdomTree Investments 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 WisdomTree Investments. Check out your portfolio center. Please also check ongoing floating volatility patterns of Thai Beverage and WisdomTree Investments.
Diversification Opportunities for Thai Beverage and WisdomTree Investments
0.65 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Thai and WisdomTree is 0.65. Overlapping area represents the amount of risk that can be diversified away by holding Thai Beverage Public and WisdomTree Investments in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on WisdomTree Investments 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 Public are associated (or correlated) with WisdomTree Investments. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of WisdomTree Investments has no effect on the direction of Thai Beverage i.e., Thai Beverage and WisdomTree Investments go up and down completely randomly.
Pair Corralation between Thai Beverage and WisdomTree Investments
Assuming the 90 days horizon Thai Beverage Public is expected to generate 1.79 times more return on investment than WisdomTree Investments. However, Thai Beverage is 1.79 times more volatile than WisdomTree Investments. It trades about -0.03 of its potential returns per unit of risk. WisdomTree Investments is currently generating about -0.37 per unit of risk. If you would invest 36.00 in Thai Beverage Public on December 8, 2024 and sell it today you would lose (1.00) from holding Thai Beverage Public or give up 2.78% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Thai Beverage Public vs. WisdomTree Investments
Performance |
| Timeline |
| Thai Beverage Public |
| WisdomTree Investments |
Thai Beverage and WisdomTree Investments Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Thai Beverage and WisdomTree Investments
The main advantage of trading using opposite Thai Beverage and WisdomTree Investments positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Thai Beverage position performs unexpectedly, WisdomTree Investments 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 WisdomTree Investments will offset losses from the drop in WisdomTree Investments' long position.| Thai Beverage vs. China Communications Services | ||
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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 Investing Opportunities module to build portfolios using our predefined set of ideas and optimize them against your investing preferences.
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