Correlation Between Thai Beverage and Chesapeake Utilities
Can any of the company-specific risk be diversified away by investing in both Thai Beverage and Chesapeake Utilities 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 Chesapeake Utilities 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 Chesapeake Utilities, you can compare the effects of market volatilities on Thai Beverage and Chesapeake Utilities 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 Chesapeake Utilities. Check out your portfolio center. Please also check ongoing floating volatility patterns of Thai Beverage and Chesapeake Utilities.
Diversification Opportunities for Thai Beverage and Chesapeake Utilities
0.37 | Correlation Coefficient |
Weak diversification
The 3 months correlation between Thai and Chesapeake is 0.37. Overlapping area represents the amount of risk that can be diversified away by holding Thai Beverage Public and Chesapeake Utilities in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Chesapeake Utilities 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 Chesapeake Utilities. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Chesapeake Utilities has no effect on the direction of Thai Beverage i.e., Thai Beverage and Chesapeake Utilities go up and down completely randomly.
Pair Corralation between Thai Beverage and Chesapeake Utilities
Assuming the 90 days horizon Thai Beverage Public is expected to generate 2.01 times more return on investment than Chesapeake Utilities. However, Thai Beverage is 2.01 times more volatile than Chesapeake Utilities. It trades about 0.17 of its potential returns per unit of risk. Chesapeake Utilities is currently generating about 0.01 per unit of risk. If you would invest 35.00 in Thai Beverage Public on September 15, 2024 and sell it today you would earn a total of 3.00 from holding Thai Beverage Public or generate 8.57% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Thai Beverage Public vs. Chesapeake Utilities
Performance |
| Timeline |
| Thai Beverage Public |
| Chesapeake Utilities |
Thai Beverage and Chesapeake Utilities Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Thai Beverage and Chesapeake Utilities
The main advantage of trading using opposite Thai Beverage and Chesapeake Utilities positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Thai Beverage position performs unexpectedly, Chesapeake Utilities 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 Chesapeake Utilities will offset losses from the drop in Chesapeake Utilities' long position.| Thai Beverage vs. Diageo plc | Thai Beverage vs. Rmy Cointreau SA | Thai Beverage vs. Treasury Wine Estates |
| Chesapeake Utilities vs. Thai Beverage Public | Chesapeake Utilities vs. Monster Beverage Corp | Chesapeake Utilities vs. Suntory Beverage Food | Chesapeake Utilities vs. Perseus Mining Limited |
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 Fundamental Analysis module to view fundamental data based on most recent published financial statements.
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