Correlation Between Thai Beverage and Boston Beer
Can any of the company-specific risk be diversified away by investing in both Thai Beverage and Boston Beer 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 Boston Beer 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 The Boston Beer, you can compare the effects of market volatilities on Thai Beverage and Boston Beer 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 Boston Beer. Check out your portfolio center. Please also check ongoing floating volatility patterns of Thai Beverage and Boston Beer.
Diversification Opportunities for Thai Beverage and Boston Beer
-0.12 | Correlation Coefficient |
Good diversification
The 3 months correlation between Thai and Boston is -0.12. Overlapping area represents the amount of risk that can be diversified away by holding Thai Beverage Public and The Boston Beer in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Boston Beer 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 Boston Beer. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Boston Beer has no effect on the direction of Thai Beverage i.e., Thai Beverage and Boston Beer go up and down completely randomly.
Pair Corralation between Thai Beverage and Boston Beer
Assuming the 90 days horizon Thai Beverage is expected to generate 1.98 times less return on investment than Boston Beer. In addition to that, Thai Beverage is 1.85 times more volatile than The Boston Beer. It trades about 0.06 of its total potential returns per unit of risk. The Boston Beer is currently generating about 0.22 per unit of volatility. If you would invest 27,920 in The Boston Beer on August 27, 2024 and sell it today you would earn a total of 2,020 from holding The Boston Beer or generate 7.23% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Thai Beverage Public vs. The Boston Beer
Performance |
| Timeline |
| Thai Beverage Public |
| Boston Beer |
Thai Beverage and Boston Beer Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Thai Beverage and Boston Beer
The main advantage of trading using opposite Thai Beverage and Boston Beer positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Thai Beverage position performs unexpectedly, Boston Beer 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 Boston Beer will offset losses from the drop in Boston Beer's long position.| Thai Beverage vs. LGI Homes | Thai Beverage vs. Hisense Home Appliances | Thai Beverage vs. MeVis Medical Solutions | Thai Beverage vs. Neinor Homes SA |
| Boston Beer vs. Merit Medical Systems | Boston Beer vs. CVR Medical Corp | Boston Beer vs. Apyx Medical Corp | Boston Beer vs. Compugroup Medical SE |
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 Efficient Frontier module to plot and analyze your portfolio and positions against risk-return landscape of the market..
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