Correlation Between Thai Beverage and Goodyear Tire
Can any of the company-specific risk be diversified away by investing in both Thai Beverage and Goodyear Tire 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 Goodyear Tire 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 Goodyear Tire Rubber, you can compare the effects of market volatilities on Thai Beverage and Goodyear Tire 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 Goodyear Tire. Check out your portfolio center. Please also check ongoing floating volatility patterns of Thai Beverage and Goodyear Tire.
Diversification Opportunities for Thai Beverage and Goodyear Tire
0.48 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Thai and Goodyear is 0.48. Overlapping area represents the amount of risk that can be diversified away by holding Thai Beverage Public and Goodyear Tire Rubber in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Goodyear Tire Rubber 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 Goodyear Tire. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Goodyear Tire Rubber has no effect on the direction of Thai Beverage i.e., Thai Beverage and Goodyear Tire go up and down completely randomly.
Pair Corralation between Thai Beverage and Goodyear Tire
Assuming the 90 days horizon Thai Beverage Public is expected to generate 0.76 times more return on investment than Goodyear Tire. However, Thai Beverage Public is 1.31 times less risky than Goodyear Tire. It trades about 0.15 of its potential returns per unit of risk. Goodyear Tire Rubber is currently generating about -0.02 per unit of risk. If you would invest 36.00 in Thai Beverage Public on September 21, 2024 and sell it today you would earn a total of 3.00 from holding Thai Beverage Public or generate 8.33% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Thai Beverage Public vs. Goodyear Tire Rubber
Performance |
| Timeline |
| Thai Beverage Public |
| Goodyear Tire Rubber |
Thai Beverage and Goodyear Tire Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Thai Beverage and Goodyear Tire
The main advantage of trading using opposite Thai Beverage and Goodyear Tire positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Thai Beverage position performs unexpectedly, Goodyear Tire 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 Goodyear Tire will offset losses from the drop in Goodyear Tire's long position.| Thai Beverage vs. SPARTAN STORES | Thai Beverage vs. MARKET VECTR RETAIL | Thai Beverage vs. JIAHUA STORES | Thai Beverage vs. QURATE RETAIL INC |
| Goodyear Tire vs. Thai Beverage Public | Goodyear Tire vs. ASSOC BR FOODS | Goodyear Tire vs. COFCO Joycome Foods | Goodyear Tire vs. Tyson Foods |
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 Idea Analyzer module to analyze all characteristics, volatility and risk-adjusted return of Macroaxis ideas.
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