Correlation Between Thai Coating and Bangkok Sheet

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Can any of the company-specific risk be diversified away by investing in both Thai Coating and Bangkok Sheet 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 Coating and Bangkok Sheet into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Thai Coating Industrial and Bangkok Sheet Metal, you can compare the effects of market volatilities on Thai Coating and Bangkok Sheet 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 Coating with a short position of Bangkok Sheet. Check out your portfolio center. Please also check ongoing floating volatility patterns of Thai Coating and Bangkok Sheet.

Diversification Opportunities for Thai Coating and Bangkok Sheet

0.19
  Correlation Coefficient

Average diversification

The 3 months correlation between Thai and Bangkok is 0.19. Overlapping area represents the amount of risk that can be diversified away by holding Thai Coating Industrial and Bangkok Sheet Metal in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Bangkok Sheet Metal and Thai Coating 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 Coating Industrial are associated (or correlated) with Bangkok Sheet. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Bangkok Sheet Metal has no effect on the direction of Thai Coating i.e., Thai Coating and Bangkok Sheet go up and down completely randomly.

Pair Corralation between Thai Coating and Bangkok Sheet

Assuming the 90 days trading horizon Thai Coating is expected to generate 42.92 times less return on investment than Bangkok Sheet. But when comparing it to its historical volatility, Thai Coating Industrial is 14.26 times less risky than Bangkok Sheet. It trades about 0.01 of its potential returns per unit of risk. Bangkok Sheet Metal is currently generating about 0.04 of returns per unit of risk over similar time horizon. If you would invest  428.00  in Bangkok Sheet Metal on September 13, 2024 and sell it today you would lose (122.00) from holding Bangkok Sheet Metal or give up 28.5% of portfolio value over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthInsignificant
Accuracy99.79%
ValuesDaily Returns

Thai Coating Industrial  vs.  Bangkok Sheet Metal

 Performance 
       Timeline  
Thai Coating Industrial 

Risk-Adjusted Performance

1 of 100

 
Weak
 
Strong
Weak
Compared to the overall equity markets, risk-adjusted returns on investments in Thai Coating Industrial are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. Despite somewhat strong fundamental drivers, Thai Coating is not utilizing all of its potentials. The latest stock price disturbance, may contribute to short-term losses for the investors.
Bangkok Sheet Metal 

Risk-Adjusted Performance

8 of 100

 
Weak
 
Strong
OK
Compared to the overall equity markets, risk-adjusted returns on investments in Bangkok Sheet Metal are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. Despite quite persistent fundamental drivers, Bangkok Sheet is not utilizing all of its potentials. The current stock price mess, may contribute to short-term losses for the institutional investors.

Thai Coating and Bangkok Sheet Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Thai Coating and Bangkok Sheet

The main advantage of trading using opposite Thai Coating and Bangkok Sheet positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Thai Coating position performs unexpectedly, Bangkok Sheet 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 Bangkok Sheet will offset losses from the drop in Bangkok Sheet's long position.
The idea behind Thai Coating Industrial and Bangkok Sheet Metal 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.
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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 Premium Stories module to follow Macroaxis premium stories from verified contributors across different equity types, categories and coverage scope.

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