Correlation Between TMT Steel and BTS Group
Can any of the company-specific risk be diversified away by investing in both TMT Steel and BTS Group 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 TMT Steel and BTS Group into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between TMT Steel Public and BTS Group Holdings, you can compare the effects of market volatilities on TMT Steel and BTS Group 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 TMT Steel with a short position of BTS Group. Check out your portfolio center. Please also check ongoing floating volatility patterns of TMT Steel and BTS Group.
Diversification Opportunities for TMT Steel and BTS Group
Very good diversification
The 3 months correlation between TMT and BTS is -0.27. Overlapping area represents the amount of risk that can be diversified away by holding TMT Steel Public and BTS Group Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on BTS Group Holdings and TMT Steel 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 TMT Steel Public are associated (or correlated) with BTS Group. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of BTS Group Holdings has no effect on the direction of TMT Steel i.e., TMT Steel and BTS Group go up and down completely randomly.
Pair Corralation between TMT Steel and BTS Group
Assuming the 90 days trading horizon TMT Steel Public is expected to generate 65.24 times more return on investment than BTS Group. However, TMT Steel is 65.24 times more volatile than BTS Group Holdings. It trades about 0.11 of its potential returns per unit of risk. BTS Group Holdings is currently generating about 0.22 per unit of risk. If you would invest 428.00 in TMT Steel Public on August 30, 2024 and sell it today you would lose (96.00) from holding TMT Steel Public or give up 22.43% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
TMT Steel Public vs. BTS Group Holdings
Performance |
| Timeline |
| TMT Steel Public |
| BTS Group Holdings |
TMT Steel and BTS Group Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with TMT Steel and BTS Group
The main advantage of trading using opposite TMT Steel and BTS Group positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if TMT Steel position performs unexpectedly, BTS Group 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 BTS Group will offset losses from the drop in BTS Group's long position.The idea behind TMT Steel Public and BTS Group Holdings 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.| BTS Group vs. Bangkok Expressway and | BTS Group vs. CP ALL Public | BTS Group vs. Airports of Thailand | BTS Group vs. Bangkok Dusit Medical |
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 Bollinger Bands module to use Bollinger Bands indicator to analyze target price for a given investing horizon.
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