Correlation Between Thai Beverage and Nippon Telegraph
Can any of the company-specific risk be diversified away by investing in both Thai Beverage and Nippon Telegraph 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 Nippon Telegraph 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 Nippon Telegraph and, you can compare the effects of market volatilities on Thai Beverage and Nippon Telegraph 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 Nippon Telegraph. Check out your portfolio center. Please also check ongoing floating volatility patterns of Thai Beverage and Nippon Telegraph.
Diversification Opportunities for Thai Beverage and Nippon Telegraph
0.07 | Correlation Coefficient |
Significant diversification
The 3 months correlation between Thai and Nippon is 0.07. Overlapping area represents the amount of risk that can be diversified away by holding Thai Beverage Public and Nippon Telegraph and in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Nippon Telegraph 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 Nippon Telegraph. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Nippon Telegraph has no effect on the direction of Thai Beverage i.e., Thai Beverage and Nippon Telegraph go up and down completely randomly.
Pair Corralation between Thai Beverage and Nippon Telegraph
Assuming the 90 days horizon Thai Beverage Public is expected to generate 1.42 times more return on investment than Nippon Telegraph. However, Thai Beverage is 1.42 times more volatile than Nippon Telegraph and. It trades about 0.21 of its potential returns per unit of risk. Nippon Telegraph and is currently generating about 0.18 per unit of risk. If you would invest 35.00 in Thai Beverage Public on September 3, 2024 and sell it today you would earn a total of 4.00 from holding Thai Beverage Public or generate 11.43% 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. Nippon Telegraph and
Performance |
| Timeline |
| Thai Beverage Public |
| Nippon Telegraph |
Thai Beverage and Nippon Telegraph Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Thai Beverage and Nippon Telegraph
The main advantage of trading using opposite Thai Beverage and Nippon Telegraph positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Thai Beverage position performs unexpectedly, Nippon Telegraph 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 Nippon Telegraph will offset losses from the drop in Nippon Telegraph's long position.The idea behind Thai Beverage Public and Nippon Telegraph and 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.| Nippon Telegraph vs. Reliance Steel Aluminum | Nippon Telegraph vs. BlueScope Steel Limited | Nippon Telegraph vs. ULTRA CLEAN HLDGS | Nippon Telegraph vs. UNIVMUSIC GRPADR050 |
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 Anywhere module to track or share privately all of your investments from the convenience of any device.
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