Correlation Between Thai Metal and Pacific Pipe
Can any of the company-specific risk be diversified away by investing in both Thai Metal and Pacific Pipe 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 Metal and Pacific Pipe into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Thai Metal Drum and Pacific Pipe Public, you can compare the effects of market volatilities on Thai Metal and Pacific Pipe 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 Metal with a short position of Pacific Pipe. Check out your portfolio center. Please also check ongoing floating volatility patterns of Thai Metal and Pacific Pipe.
Diversification Opportunities for Thai Metal and Pacific Pipe
0.0 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between Thai and Pacific is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding Thai Metal Drum and Pacific Pipe Public in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Pacific Pipe Public and Thai Metal 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 Metal Drum are associated (or correlated) with Pacific Pipe. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Pacific Pipe Public has no effect on the direction of Thai Metal i.e., Thai Metal and Pacific Pipe go up and down completely randomly.
Pair Corralation between Thai Metal and Pacific Pipe
Assuming the 90 days trading horizon Thai Metal Drum is expected to generate 27.93 times more return on investment than Pacific Pipe. However, Thai Metal is 27.93 times more volatile than Pacific Pipe Public. It trades about 0.06 of its potential returns per unit of risk. Pacific Pipe Public is currently generating about -0.05 per unit of risk. If you would invest 2,141 in Thai Metal Drum on August 29, 2024 and sell it today you would earn a total of 339.00 from holding Thai Metal Drum or generate 15.83% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Flat |
| Strength | Insignificant |
| Accuracy | 99.17% |
| Values | Daily Returns |
Thai Metal Drum vs. Pacific Pipe Public
Performance |
| Timeline |
| Thai Metal Drum |
| Pacific Pipe Public |
Thai Metal and Pacific Pipe Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Thai Metal and Pacific Pipe
The main advantage of trading using opposite Thai Metal and Pacific Pipe positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Thai Metal position performs unexpectedly, Pacific Pipe 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 Pacific Pipe will offset losses from the drop in Pacific Pipe's long position.The idea behind Thai Metal Drum and Pacific Pipe Public 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.| Pacific Pipe vs. 2S Metal Public | Pacific Pipe vs. AAPICO Hitech Public | Pacific Pipe vs. AJ Plast 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 Portfolio Anywhere module to track or share privately all of your investments from the convenience of any device.
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