Correlation Between Thai Metal and Tata Steel
Can any of the company-specific risk be diversified away by investing in both Thai Metal and Tata Steel 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 Tata Steel 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 Tata Steel Public, you can compare the effects of market volatilities on Thai Metal and Tata Steel 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 Tata Steel. Check out your portfolio center. Please also check ongoing floating volatility patterns of Thai Metal and Tata Steel.
Diversification Opportunities for Thai Metal and Tata Steel
-0.03 | Correlation Coefficient |
Good diversification
The 3 months correlation between Thai and Tata is -0.03. Overlapping area represents the amount of risk that can be diversified away by holding Thai Metal Drum and Tata Steel Public in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Tata Steel 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 Tata Steel. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Tata Steel Public has no effect on the direction of Thai Metal i.e., Thai Metal and Tata Steel go up and down completely randomly.
Pair Corralation between Thai Metal and Tata Steel
Assuming the 90 days trading horizon Thai Metal Drum is expected to generate 1.42 times more return on investment than Tata Steel. However, Thai Metal is 1.42 times more volatile than Tata Steel Public. It trades about 0.08 of its potential returns per unit of risk. Tata Steel Public is currently generating about 0.05 per unit of risk. If you would invest 2,249 in Thai Metal Drum on November 5, 2024 and sell it today you would earn a total of 221.00 from holding Thai Metal Drum or generate 9.83% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 99.29% |
| Values | Daily Returns |
Thai Metal Drum vs. Tata Steel Public
Performance |
| Timeline |
| Thai Metal Drum |
| Tata Steel Public |
Thai Metal and Tata Steel Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Thai Metal and Tata Steel
The main advantage of trading using opposite Thai Metal and Tata Steel positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Thai Metal position performs unexpectedly, Tata Steel 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 Tata Steel will offset losses from the drop in Tata Steel's long position.| Thai Metal vs. Thantawan Industry Public | Thai Metal vs. Thitikorn Public | Thai Metal vs. Siam Steel Service | Thai Metal vs. Thai Vegetable Oil |
| Tata Steel vs. TMT Steel Public | Tata Steel vs. TPI Polene Public | Tata Steel vs. Thoresen Thai Agencies | Tata Steel vs. TRC Construction 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 Money Managers module to screen money managers from public funds and ETFs managed around the world.
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