Correlation Between Thai Solar and Prime Road
Can any of the company-specific risk be diversified away by investing in both Thai Solar 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 Solar 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 Solar Energy and Prime Road Power, you can compare the effects of market volatilities on Thai Solar 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 Solar with a short position of Prime Road. Check out your portfolio center. Please also check ongoing floating volatility patterns of Thai Solar and Prime Road.
Diversification Opportunities for Thai Solar and Prime Road
0.86 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Thai and Prime is 0.86. Overlapping area represents the amount of risk that can be diversified away by holding Thai Solar Energy 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 Solar 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 Solar Energy 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 Solar i.e., Thai Solar and Prime Road go up and down completely randomly.
Pair Corralation between Thai Solar and Prime Road
Assuming the 90 days trading horizon Thai Solar Energy is expected to generate 1.0 times more return on investment than Prime Road. However, Thai Solar Energy is 1.0 times less risky than Prime Road. It trades about 0.05 of its potential returns per unit of risk. Prime Road Power is currently generating about 0.05 per unit of risk. If you would invest 172.00 in Thai Solar Energy on September 15, 2024 and sell it today you would lose (80.00) from holding Thai Solar Energy or give up 46.51% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 99.62% |
| Values | Daily Returns |
Thai Solar Energy vs. Prime Road Power
Performance |
| Timeline |
| Thai Solar Energy |
| Prime Road Power |
Thai Solar and Prime Road Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Thai Solar and Prime Road
The main advantage of trading using opposite Thai Solar and Prime Road positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Thai Solar 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 Solar vs. BCPG Public | Thai Solar vs. Energy Absolute Public | Thai Solar vs. Gunkul Engineering Public | Thai Solar vs. Gulf Energy Development |
| 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 Idea Analyzer module to analyze all characteristics, volatility and risk-adjusted return of Macroaxis ideas.
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