Correlation Between Thai Beverage and GUDANG GARAM
Can any of the company-specific risk be diversified away by investing in both Thai Beverage and GUDANG GARAM 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 GUDANG GARAM 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 GUDANG GARAM, you can compare the effects of market volatilities on Thai Beverage and GUDANG GARAM 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 GUDANG GARAM. Check out your portfolio center. Please also check ongoing floating volatility patterns of Thai Beverage and GUDANG GARAM.
Diversification Opportunities for Thai Beverage and GUDANG GARAM
0.15 | Correlation Coefficient |
Average diversification
The 3 months correlation between Thai and GUDANG is 0.15. Overlapping area represents the amount of risk that can be diversified away by holding Thai Beverage Public and GUDANG GARAM in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on GUDANG GARAM 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 GUDANG GARAM. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of GUDANG GARAM has no effect on the direction of Thai Beverage i.e., Thai Beverage and GUDANG GARAM go up and down completely randomly.
Pair Corralation between Thai Beverage and GUDANG GARAM
Assuming the 90 days horizon Thai Beverage Public is expected to generate 2.42 times more return on investment than GUDANG GARAM. However, Thai Beverage is 2.42 times more volatile than GUDANG GARAM. It trades about 0.05 of its potential returns per unit of risk. GUDANG GARAM is currently generating about -0.02 per unit of risk. If you would invest 16.00 in Thai Beverage Public on September 3, 2024 and sell it today you would earn a total of 23.00 from holding Thai Beverage Public or generate 143.75% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Thai Beverage Public vs. GUDANG GARAM
Performance |
| Timeline |
| Thai Beverage Public |
| GUDANG GARAM |
Thai Beverage and GUDANG GARAM Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Thai Beverage and GUDANG GARAM
The main advantage of trading using opposite Thai Beverage and GUDANG GARAM positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Thai Beverage position performs unexpectedly, GUDANG GARAM 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 GUDANG GARAM will offset losses from the drop in GUDANG GARAM's long position.The idea behind Thai Beverage Public and GUDANG GARAM 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.| GUDANG GARAM vs. Thai Beverage Public | GUDANG GARAM vs. Cal Maine Foods | GUDANG GARAM vs. Harmony Gold Mining | GUDANG GARAM vs. GALENA MINING LTD |
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 Portfolio Diagnostics module to use generated alerts and portfolio events aggregator to diagnose current holdings.
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