Correlation Between Teka Construction and TKrungthai Industries
Can any of the company-specific risk be diversified away by investing in both Teka Construction and TKrungthai Industries 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 Teka Construction and TKrungthai Industries into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Teka Construction PCL and TKrungthai Industries Public, you can compare the effects of market volatilities on Teka Construction and TKrungthai Industries 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 Teka Construction with a short position of TKrungthai Industries. Check out your portfolio center. Please also check ongoing floating volatility patterns of Teka Construction and TKrungthai Industries.
Diversification Opportunities for Teka Construction and TKrungthai Industries
0.03 | Correlation Coefficient |
Significant diversification
The 3 months correlation between Teka and TKrungthai is 0.03. Overlapping area represents the amount of risk that can be diversified away by holding Teka Construction PCL and TKrungthai Industries Public in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on TKrungthai Industries and Teka Construction 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 Teka Construction PCL are associated (or correlated) with TKrungthai Industries. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of TKrungthai Industries has no effect on the direction of Teka Construction i.e., Teka Construction and TKrungthai Industries go up and down completely randomly.
Pair Corralation between Teka Construction and TKrungthai Industries
Assuming the 90 days trading horizon Teka Construction is expected to generate 92.9 times less return on investment than TKrungthai Industries. But when comparing it to its historical volatility, Teka Construction PCL is 34.63 times less risky than TKrungthai Industries. It trades about 0.03 of its potential returns per unit of risk. TKrungthai Industries Public is currently generating about 0.07 of returns per unit of risk over similar time horizon. If you would invest 176.00 in TKrungthai Industries Public on September 3, 2024 and sell it today you would lose (16.00) from holding TKrungthai Industries Public or give up 9.09% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Teka Construction PCL vs. TKrungthai Industries Public
Performance |
| Timeline |
| Teka Construction PCL |
| TKrungthai Industries |
Teka Construction and TKrungthai Industries Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Teka Construction and TKrungthai Industries
The main advantage of trading using opposite Teka Construction and TKrungthai Industries positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Teka Construction position performs unexpectedly, TKrungthai Industries 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 TKrungthai Industries will offset losses from the drop in TKrungthai Industries' long position.| Teka Construction vs. TKrungthai Industries Public | Teka Construction vs. TCM Public | Teka Construction vs. Well Graded Engineering | Teka Construction vs. The Steel Public |
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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 Latest Portfolios module to quick portfolio dashboard that showcases your latest portfolios.
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