Correlation Between Western Digital and Thai Beverage
Can any of the company-specific risk be diversified away by investing in both Western Digital 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 Western Digital and Thai Beverage into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Western Digital and Thai Beverage PCL, you can compare the effects of market volatilities on Western Digital 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 Western Digital with a short position of Thai Beverage. Check out your portfolio center. Please also check ongoing floating volatility patterns of Western Digital and Thai Beverage.
Diversification Opportunities for Western Digital and Thai Beverage
0.0 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between Western and Thai is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding Western Digital and Thai Beverage PCL in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Thai Beverage PCL and Western Digital 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 Western Digital 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 PCL has no effect on the direction of Western Digital i.e., Western Digital and Thai Beverage go up and down completely randomly.
Pair Corralation between Western Digital and Thai Beverage
Considering the 90-day investment horizon Western Digital is expected to generate 1.33 times more return on investment than Thai Beverage. However, Western Digital is 1.33 times more volatile than Thai Beverage PCL. It trades about 0.08 of its potential returns per unit of risk. Thai Beverage PCL is currently generating about -0.07 per unit of risk. If you would invest 4,010 in Western Digital on August 31, 2024 and sell it today you would earn a total of 3,289 from holding Western Digital or generate 82.02% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Flat |
| Strength | Insignificant |
| Accuracy | 46.79% |
| Values | Daily Returns |
Western Digital vs. Thai Beverage PCL
Performance |
| Timeline |
| Western Digital |
| Thai Beverage PCL |
Western Digital and Thai Beverage Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Western Digital and Thai Beverage
The main advantage of trading using opposite Western Digital and Thai Beverage positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Western Digital 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.| Western Digital vs. RLJ Lodging Trust | Western Digital vs. Aquagold International | Western Digital vs. Stepstone Group | Western Digital vs. Morningstar Unconstrained Allocation |
| Thai Beverage vs. Diageo PLC ADR | Thai Beverage vs. Pernod Ricard SA | Thai Beverage vs. Constellation Brands Class | Thai Beverage vs. Brown Forman |
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 Price Ceiling Movement module to calculate and plot Price Ceiling Movement for different equity instruments.
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