Correlation Between Thai Life and Prime Road
Can any of the company-specific risk be diversified away by investing in both Thai Life and Prime Road 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 Life and Prime Road into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Thai Life Insurance and Prime Road Power, you can compare the effects of market volatilities on Thai Life and Prime Road 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 Life with a short position of Prime Road. Check out your portfolio center. Please also check ongoing floating volatility patterns of Thai Life and Prime Road.
Diversification Opportunities for Thai Life and Prime Road
-0.47 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Thai and Prime is -0.47. Overlapping area represents the amount of risk that can be diversified away by holding Thai Life Insurance and Prime Road Power in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Prime Road Power and Thai Life 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 Life Insurance are associated (or correlated) with Prime Road. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Prime Road Power has no effect on the direction of Thai Life i.e., Thai Life and Prime Road go up and down completely randomly.
Pair Corralation between Thai Life and Prime Road
Assuming the 90 days trading horizon Thai Life is expected to generate 58.94 times less return on investment than Prime Road. But when comparing it to its historical volatility, Thai Life Insurance is 29.39 times less risky than Prime Road. It trades about 0.03 of its potential returns per unit of risk. Prime Road Power is currently generating about 0.05 of returns per unit of risk over similar time horizon. If you would invest 62.00 in Prime Road Power on September 14, 2024 and sell it today you would lose (39.00) from holding Prime Road Power or give up 62.9% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Thai Life Insurance vs. Prime Road Power
Performance |
| Timeline |
| Thai Life Insurance |
| Prime Road Power |
Thai Life and Prime Road Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Thai Life and Prime Road
The main advantage of trading using opposite Thai Life and Prime Road positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Thai Life position performs unexpectedly, Prime Road 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 Prime Road will offset losses from the drop in Prime Road's long position.| Thai Life vs. Bangkok Life Assurance | Thai Life vs. PTT Oil and | Thai Life vs. Home Product Center | Thai Life vs. Muangthai Capital Public |
| Prime Road vs. BCPG Public | Prime Road vs. Energy Absolute Public | Prime Road vs. Gunkul Engineering Public | Prime Road vs. Gulf Energy Development |
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 Analyzer module to portfolio analysis module that provides access to portfolio diagnostics and optimization engine.
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