Correlation Between Thai Beverage and CVS Health
Can any of the company-specific risk be diversified away by investing in both Thai Beverage and CVS Health 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 CVS Health 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 CVS Health, you can compare the effects of market volatilities on Thai Beverage and CVS Health 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 CVS Health. Check out your portfolio center. Please also check ongoing floating volatility patterns of Thai Beverage and CVS Health.
Diversification Opportunities for Thai Beverage and CVS Health
0.27 | Correlation Coefficient |
Modest diversification
The 3 months correlation between Thai and CVS is 0.27. Overlapping area represents the amount of risk that can be diversified away by holding Thai Beverage Public and CVS Health in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on CVS Health 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 CVS Health. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of CVS Health has no effect on the direction of Thai Beverage i.e., Thai Beverage and CVS Health go up and down completely randomly.
Pair Corralation between Thai Beverage and CVS Health
Assuming the 90 days horizon Thai Beverage Public is expected to generate 3.01 times more return on investment than CVS Health. However, Thai Beverage is 3.01 times more volatile than CVS Health. It trades about 0.09 of its potential returns per unit of risk. CVS Health is currently generating about 0.04 per unit of risk. If you would invest 20.00 in Thai Beverage Public on September 3, 2024 and sell it today you would earn a total of 19.00 from holding Thai Beverage Public or generate 95.0% 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. CVS Health
Performance |
| Timeline |
| Thai Beverage Public |
| CVS Health |
Thai Beverage and CVS Health Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Thai Beverage and CVS Health
The main advantage of trading using opposite Thai Beverage and CVS Health positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Thai Beverage position performs unexpectedly, CVS Health 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 CVS Health will offset losses from the drop in CVS Health's long position.The idea behind Thai Beverage Public and CVS Health pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.| CVS Health vs. GFL ENVIRONM | CVS Health vs. Reliance Steel Aluminum | CVS Health vs. Chunghwa Telecom Co | CVS Health vs. BlueScope Steel 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 Equity Search module to search for actively traded equities including funds and ETFs from over 30 global markets.
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