Correlation Between Volkswagen and Thai Beverage
Can any of the company-specific risk be diversified away by investing in both Volkswagen and Thai Beverage 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 Volkswagen and Thai Beverage into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Volkswagen AG and Thai Beverage Public, you can compare the effects of market volatilities on Volkswagen and Thai Beverage 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 Volkswagen with a short position of Thai Beverage. Check out your portfolio center. Please also check ongoing floating volatility patterns of Volkswagen and Thai Beverage.
Diversification Opportunities for Volkswagen and Thai Beverage
-0.01 | Correlation Coefficient |
Good diversification
The 3 months correlation between Volkswagen and Thai is -0.01. Overlapping area represents the amount of risk that can be diversified away by holding Volkswagen AG and Thai Beverage Public in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Thai Beverage Public and Volkswagen 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 Volkswagen AG are associated (or correlated) with Thai Beverage. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Thai Beverage Public has no effect on the direction of Volkswagen i.e., Volkswagen and Thai Beverage go up and down completely randomly.
Pair Corralation between Volkswagen and Thai Beverage
Assuming the 90 days trading horizon Volkswagen AG is expected to under-perform the Thai Beverage. But the stock apears to be less risky and, when comparing its historical volatility, Volkswagen AG is 3.45 times less risky than Thai Beverage. The stock trades about -0.05 of its potential returns per unit of risk. The Thai Beverage Public is currently generating about 0.05 of returns per unit of risk over similar time horizon. If you would invest 16.00 in Thai Beverage Public on September 3, 2024 and sell it today you would earn a total of 23.00 from holding Thai Beverage Public or generate 143.75% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Volkswagen AG vs. Thai Beverage Public
Performance |
| Timeline |
| Volkswagen AG |
| Thai Beverage Public |
Volkswagen and Thai Beverage Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Volkswagen and Thai Beverage
The main advantage of trading using opposite Volkswagen and Thai Beverage positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Volkswagen position performs unexpectedly, Thai Beverage 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 Beverage will offset losses from the drop in Thai Beverage's long position.| Volkswagen vs. Hemisphere Energy Corp | Volkswagen vs. Microbot Medical | Volkswagen vs. Air Lease | Volkswagen vs. Chunghwa Telecom Co |
| Thai Beverage vs. Constellation Brands | Thai Beverage vs. Brown Forman | Thai Beverage vs. Treasury Wine Estates |
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 Stock Tickers module to use high-impact, comprehensive, and customizable stock tickers that can be easily integrated to any websites.
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