Correlation Between Thai Beverage and Bank of America Corp
Can any of the company-specific risk be diversified away by investing in both Thai Beverage and Bank of America Corp 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 Bank of America Corp 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 Bank of America, you can compare the effects of market volatilities on Thai Beverage and Bank of America Corp 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 Bank of America Corp. Check out your portfolio center. Please also check ongoing floating volatility patterns of Thai Beverage and Bank of America Corp.
Diversification Opportunities for Thai Beverage and Bank of America Corp
-0.15 | Correlation Coefficient |
Good diversification
The 3 months correlation between Thai and Bank is -0.15. Overlapping area represents the amount of risk that can be diversified away by holding Thai Beverage Public and Bank of America in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Bank of America Corp 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 Bank of America Corp. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Bank of America Corp has no effect on the direction of Thai Beverage i.e., Thai Beverage and Bank of America Corp go up and down completely randomly.
Pair Corralation between Thai Beverage and Bank of America Corp
Assuming the 90 days horizon Thai Beverage Public is expected to generate 3.94 times more return on investment than Bank of America Corp. However, Thai Beverage is 3.94 times more volatile than Bank of America. It trades about 0.06 of its potential returns per unit of risk. Bank of America is currently generating about 0.11 per unit of risk. If you would invest 15.00 in Thai Beverage Public on August 29, 2024 and sell it today you would earn a total of 21.00 from holding Thai Beverage Public or generate 140.0% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 99.75% |
| Values | Daily Returns |
Thai Beverage Public vs. Bank of America
Performance |
| Timeline |
| Thai Beverage Public |
| Bank of America Corp |
Thai Beverage and Bank of America Corp Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Thai Beverage and Bank of America Corp
The main advantage of trading using opposite Thai Beverage and Bank of America Corp positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Thai Beverage position performs unexpectedly, Bank of America Corp 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 Bank of America Corp will offset losses from the drop in Bank of America Corp's long position.| Thai Beverage vs. Superior Plus Corp | Thai Beverage vs. Origin Agritech | Thai Beverage vs. Identiv | Thai Beverage vs. INTUITIVE SURGICAL |
| Bank of America Corp vs. SOFTBANK P ADR | Bank of America Corp vs. Thai Beverage Public | Bank of America Corp vs. Fevertree Drinks PLC | Bank of America Corp vs. SCANSOURCE |
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 Rebalancing module to analyze risk-adjusted returns against different time horizons to find asset-allocation targets.
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