Correlation Between VGI Public and Thai Steel
Can any of the company-specific risk be diversified away by investing in both VGI Public and Thai 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 VGI Public and Thai Steel into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between VGI Public and Thai Steel Cable, you can compare the effects of market volatilities on VGI Public and Thai 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 VGI Public with a short position of Thai Steel. Check out your portfolio center. Please also check ongoing floating volatility patterns of VGI Public and Thai Steel.
Diversification Opportunities for VGI Public and Thai Steel
0.7 | Correlation Coefficient |
Poor diversification
The 3 months correlation between VGI and Thai is 0.7. Overlapping area represents the amount of risk that can be diversified away by holding VGI Public and Thai Steel Cable in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Thai Steel Cable and VGI Public 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 VGI Public are associated (or correlated) with Thai Steel. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Thai Steel Cable has no effect on the direction of VGI Public i.e., VGI Public and Thai Steel go up and down completely randomly.
Pair Corralation between VGI Public and Thai Steel
Assuming the 90 days trading horizon VGI Public is expected to under-perform the Thai Steel. In addition to that, VGI Public is 1.22 times more volatile than Thai Steel Cable. It trades about -0.21 of its total potential returns per unit of risk. Thai Steel Cable is currently generating about 0.15 per unit of volatility. If you would invest 1,430 in Thai Steel Cable on August 30, 2024 and sell it today you would earn a total of 40.00 from holding Thai Steel Cable or generate 2.8% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
VGI Public vs. Thai Steel Cable
Performance |
| Timeline |
| VGI Public |
| Thai Steel Cable |
VGI Public and Thai Steel Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with VGI Public and Thai Steel
The main advantage of trading using opposite VGI Public and Thai Steel positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if VGI Public position performs unexpectedly, Thai 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 Thai Steel will offset losses from the drop in Thai Steel's long position.| VGI Public vs. WHA Public | VGI Public vs. Thai Union Group | VGI Public vs. VGI Public | VGI Public vs. Thai Vegetable Oil |
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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 Sectors module to list of equity sectors categorizing publicly traded companies based on their primary business activities.
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