Correlation Between Focus Home and THAI BEVERAGE

Can any of the company-specific risk be diversified away by investing in both Focus Home 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 Focus Home and THAI BEVERAGE into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Focus Home Interactive and THAI BEVERAGE, you can compare the effects of market volatilities on Focus Home 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 Focus Home with a short position of THAI BEVERAGE. Check out your portfolio center. Please also check ongoing floating volatility patterns of Focus Home and THAI BEVERAGE.

Diversification Opportunities for Focus Home and THAI BEVERAGE

0.15

Correlation Coefficient

Focus Home  THAI BEVERAGE

Average diversification

The 3 months correlation between Focus and THAI is 0.15. Overlapping area represents the amount of risk that can be diversified away by holding Focus Home Interactive and THAI BEVERAGE in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on THAI BEVERAGE and Focus Home 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 Focus Home Interactive 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 has no effect on the direction of Focus Home i.e., Focus Home and THAI BEVERAGE go up and down completely randomly.

Pair Corralation between Focus Home and THAI BEVERAGE

Assuming the 90 days horizon Focus Home Interactive is not expected to generate positive returns. Moreover, Focus Home is 1.59 times more volatile than THAI BEVERAGE. It trades away all of its potential returns to assume current level of volatility. THAI BEVERAGE is currently generating about 0.05 per unit of risk. If you would invest  35.00  in THAI BEVERAGE on October 26, 2024 and sell it today you would earn a total of  2.00  from holding THAI BEVERAGE or generate 5.71% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	100.0%
Values	Daily Returns

Focus Home Interactive  vs.  THAI BEVERAGE

Focus Home Interactive

Risk-Adjusted Performance

0 of 100

Weak

Over the last 90 days Focus Home Interactive has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable basic indicators, Focus Home is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

THAI BEVERAGE

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in THAI BEVERAGE are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. In spite of rather fragile basic indicators, THAI BEVERAGE may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Pair Trading with Focus Home and THAI BEVERAGE

The main advantage of trading using opposite Focus Home and THAI BEVERAGE positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Focus Home 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.

The idea behind Focus Home Interactive and THAI BEVERAGE pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.

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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 Piotroski F Score module to get Piotroski F Score based on the binary analysis strategy of nine different fundamentals.