Correlation Between Thai Beverage and UNICREDIT SPA
Can any of the company-specific risk be diversified away by investing in both Thai Beverage and UNICREDIT SPA 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 UNICREDIT SPA 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 UNICREDIT SPA ADR, you can compare the effects of market volatilities on Thai Beverage and UNICREDIT SPA 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 UNICREDIT SPA. Check out your portfolio center. Please also check ongoing floating volatility patterns of Thai Beverage and UNICREDIT SPA.
Diversification Opportunities for Thai Beverage and UNICREDIT SPA
-0.36 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Thai and UNICREDIT is -0.36. Overlapping area represents the amount of risk that can be diversified away by holding Thai Beverage Public and UNICREDIT SPA ADR in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on UNICREDIT SPA ADR 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 UNICREDIT SPA. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of UNICREDIT SPA ADR has no effect on the direction of Thai Beverage i.e., Thai Beverage and UNICREDIT SPA go up and down completely randomly.
Pair Corralation between Thai Beverage and UNICREDIT SPA
Assuming the 90 days horizon Thai Beverage Public is expected to generate 1.1 times more return on investment than UNICREDIT SPA. However, Thai Beverage is 1.1 times more volatile than UNICREDIT SPA ADR. It trades about 0.17 of its potential returns per unit of risk. UNICREDIT SPA ADR is currently generating about -0.02 per unit of risk. If you would invest 35.00 in Thai Beverage Public on September 12, 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 Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Thai Beverage Public vs. UNICREDIT SPA ADR
Performance |
| Timeline |
| Thai Beverage Public |
| UNICREDIT SPA ADR |
Thai Beverage and UNICREDIT SPA Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Thai Beverage and UNICREDIT SPA
The main advantage of trading using opposite Thai Beverage and UNICREDIT SPA positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Thai Beverage position performs unexpectedly, UNICREDIT SPA 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 UNICREDIT SPA will offset losses from the drop in UNICREDIT SPA's long position.| Thai Beverage vs. Diageo plc | Thai Beverage vs. Rmy Cointreau SA | Thai Beverage vs. Treasury Wine Estates |
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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 Alpha Finder module to use alpha and beta coefficients to find investment opportunities after accounting for the risk.
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