Correlation Between Tropical Canning and Thai Steel
Can any of the company-specific risk be diversified away by investing in both Tropical Canning and Thai Steel 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 Tropical Canning and Thai Steel into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Tropical Canning Public and Thai Steel Cable, you can compare the effects of market volatilities on Tropical Canning and Thai Steel 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 Tropical Canning with a short position of Thai Steel. Check out your portfolio center. Please also check ongoing floating volatility patterns of Tropical Canning and Thai Steel.
Diversification Opportunities for Tropical Canning and Thai Steel
0.9 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between Tropical and Thai is 0.9. Overlapping area represents the amount of risk that can be diversified away by holding Tropical Canning Public and Thai Steel Cable in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Thai Steel Cable and Tropical Canning 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 Tropical Canning Public are associated (or correlated) with Thai Steel. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Thai Steel Cable has no effect on the direction of Tropical Canning i.e., Tropical Canning and Thai Steel go up and down completely randomly.
Pair Corralation between Tropical Canning and Thai Steel
Assuming the 90 days horizon Tropical Canning is expected to generate 1.06 times less return on investment than Thai Steel. In addition to that, Tropical Canning is 1.0 times more volatile than Thai Steel Cable. It trades about 0.04 of its total potential returns per unit of risk. Thai Steel Cable is currently generating about 0.04 per unit of volatility. If you would invest 1,266 in Thai Steel Cable on September 4, 2024 and sell it today you would earn a total of 224.00 from holding Thai Steel Cable or generate 17.69% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Tropical Canning Public vs. Thai Steel Cable
Performance |
| Timeline |
| Tropical Canning Public |
| Thai Steel Cable |
Tropical Canning and Thai Steel Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Tropical Canning and Thai Steel
The main advantage of trading using opposite Tropical Canning and Thai Steel positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Tropical Canning position performs unexpectedly, Thai Steel 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 Thai Steel will offset losses from the drop in Thai Steel's long position.| Tropical Canning vs. Airports of Thailand | Tropical Canning vs. PTT Public | Tropical Canning vs. Bangkok Dusit Medical | Tropical Canning vs. Kasikornbank Public |
| Thai Steel vs. United Paper Public | Thai Steel vs. TMT Steel Public | Thai Steel vs. Thai Stanley Electric | Thai Steel vs. Inoue Rubber Public |
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 Balance Of Power module to check stock momentum by analyzing Balance Of Power indicator and other technical ratios.
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