Correlation Between Thai Rayon and Union Plastic
Can any of the company-specific risk be diversified away by investing in both Thai Rayon and Union Plastic 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 Rayon and Union Plastic into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Thai Rayon Public and Union Plastic Public, you can compare the effects of market volatilities on Thai Rayon and Union Plastic 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 Rayon with a short position of Union Plastic. Check out your portfolio center. Please also check ongoing floating volatility patterns of Thai Rayon and Union Plastic.
Diversification Opportunities for Thai Rayon and Union Plastic
0.5 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Thai and Union is 0.5. Overlapping area represents the amount of risk that can be diversified away by holding Thai Rayon Public and Union Plastic Public in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Union Plastic Public and Thai Rayon 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 Rayon Public are associated (or correlated) with Union Plastic. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Union Plastic Public has no effect on the direction of Thai Rayon i.e., Thai Rayon and Union Plastic go up and down completely randomly.
Pair Corralation between Thai Rayon and Union Plastic
Assuming the 90 days horizon Thai Rayon Public is expected to generate 1.05 times more return on investment than Union Plastic. However, Thai Rayon is 1.05 times more volatile than Union Plastic Public. It trades about 0.04 of its potential returns per unit of risk. Union Plastic Public is currently generating about 0.04 per unit of risk. If you would invest 4,814 in Thai Rayon Public on September 14, 2024 and sell it today you would lose (914.00) from holding Thai Rayon Public or give up 18.99% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 90.19% |
| Values | Daily Returns |
Thai Rayon Public vs. Union Plastic Public
Performance |
| Timeline |
| Thai Rayon Public |
| Union Plastic Public |
Thai Rayon and Union Plastic Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Thai Rayon and Union Plastic
The main advantage of trading using opposite Thai Rayon and Union Plastic positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Thai Rayon position performs unexpectedly, Union Plastic 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 Union Plastic will offset losses from the drop in Union Plastic's long position.| Thai Rayon vs. Thantawan Industry Public | Thai Rayon vs. The Erawan Group | Thai Rayon vs. Jay Mart Public | Thai Rayon vs. Airports of Thailand |
| Union Plastic vs. Thai Poly Acrylic | Union Plastic vs. Union Pioneer Public | Union Plastic vs. Univentures Public | Union Plastic vs. Thantawan Industry 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 Equity Valuation module to check real value of public entities based on technical and fundamental data.
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