Correlation Between Thai German and Steel Public
Can any of the company-specific risk be diversified away by investing in both Thai German and Steel Public 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 German and Steel Public into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Thai German Products Public and The Steel Public, you can compare the effects of market volatilities on Thai German and Steel Public 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 German with a short position of Steel Public. Check out your portfolio center. Please also check ongoing floating volatility patterns of Thai German and Steel Public.
Diversification Opportunities for Thai German and Steel Public
0.64 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Thai and Steel is 0.64. Overlapping area represents the amount of risk that can be diversified away by holding Thai German Products Public and The Steel Public in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Steel Public and Thai German 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 German Products Public are associated (or correlated) with Steel Public. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Steel Public has no effect on the direction of Thai German i.e., Thai German and Steel Public go up and down completely randomly.
Pair Corralation between Thai German and Steel Public
Assuming the 90 days trading horizon Thai German Products Public is expected to generate 1.01 times more return on investment than Steel Public. However, Thai German is 1.01 times more volatile than The Steel Public. It trades about 0.05 of its potential returns per unit of risk. The Steel Public is currently generating about 0.04 per unit of risk. If you would invest 16.00 in Thai German Products Public on August 31, 2024 and sell it today you would lose (6.00) from holding Thai German Products Public or give up 37.5% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Thai German Products Public vs. The Steel Public
Performance |
| Timeline |
| Thai German Products |
| Steel Public |
Thai German and Steel Public Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Thai German and Steel Public
The main advantage of trading using opposite Thai German and Steel Public positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Thai German position performs unexpectedly, Steel Public 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 Steel Public will offset losses from the drop in Steel Public's long position.| Thai German vs. AAPICO Hitech Public | Thai German vs. AP Public | Thai German vs. Aikchol Hospital Public | Thai German vs. Bank of Ayudhya |
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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 Correlation Analysis module to reduce portfolio risk simply by holding instruments which are not perfectly correlated.
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