Correlation Between Union Petrochemical and Thai Mitsuwa
Can any of the company-specific risk be diversified away by investing in both Union Petrochemical and Thai Mitsuwa 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 Union Petrochemical and Thai Mitsuwa into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Union Petrochemical Public and Thai Mitsuwa Public, you can compare the effects of market volatilities on Union Petrochemical and Thai Mitsuwa 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 Union Petrochemical with a short position of Thai Mitsuwa. Check out your portfolio center. Please also check ongoing floating volatility patterns of Union Petrochemical and Thai Mitsuwa.
Diversification Opportunities for Union Petrochemical and Thai Mitsuwa
0.77 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Union and Thai is 0.77. Overlapping area represents the amount of risk that can be diversified away by holding Union Petrochemical Public and Thai Mitsuwa Public in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Thai Mitsuwa Public and Union Petrochemical 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 Union Petrochemical Public are associated (or correlated) with Thai Mitsuwa. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Thai Mitsuwa Public has no effect on the direction of Union Petrochemical i.e., Union Petrochemical and Thai Mitsuwa go up and down completely randomly.
Pair Corralation between Union Petrochemical and Thai Mitsuwa
Assuming the 90 days trading horizon Union Petrochemical is expected to generate 1.17 times less return on investment than Thai Mitsuwa. In addition to that, Union Petrochemical is 1.0 times more volatile than Thai Mitsuwa Public. It trades about 0.04 of its total potential returns per unit of risk. Thai Mitsuwa Public is currently generating about 0.04 per unit of volatility. If you would invest 3,298 in Thai Mitsuwa Public on September 3, 2024 and sell it today you would earn a total of 2,952 from holding Thai Mitsuwa Public or generate 89.51% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Union Petrochemical Public vs. Thai Mitsuwa Public
Performance |
| Timeline |
| Union Petrochemical |
| Thai Mitsuwa Public |
Union Petrochemical and Thai Mitsuwa Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Union Petrochemical and Thai Mitsuwa
The main advantage of trading using opposite Union Petrochemical and Thai Mitsuwa positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Union Petrochemical position performs unexpectedly, Thai Mitsuwa 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 Thai Mitsuwa will offset losses from the drop in Thai Mitsuwa's long position.| Union Petrochemical vs. Vibhavadi Medical Center | Union Petrochemical vs. TWZ Public | Union Petrochemical vs. WHA Public | Union Petrochemical vs. Tata Steel Public |
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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 Analyst Advice module to analyst recommendations and target price estimates broken down by several categories.
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