Correlation Between TITAN MACHINERY and THAI BEVERAGE
Can any of the company-specific risk be diversified away by investing in both TITAN MACHINERY 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 TITAN MACHINERY and THAI BEVERAGE into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between TITAN MACHINERY and THAI BEVERAGE, you can compare the effects of market volatilities on TITAN MACHINERY 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 TITAN MACHINERY with a short position of THAI BEVERAGE. Check out your portfolio center. Please also check ongoing floating volatility patterns of TITAN MACHINERY and THAI BEVERAGE.
Diversification Opportunities for TITAN MACHINERY and THAI BEVERAGE
0.5 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between TITAN and THAI is 0.5. Overlapping area represents the amount of risk that can be diversified away by holding TITAN MACHINERY and THAI BEVERAGE in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on THAI BEVERAGE and TITAN MACHINERY 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 TITAN MACHINERY 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 TITAN MACHINERY i.e., TITAN MACHINERY and THAI BEVERAGE go up and down completely randomly.
Pair Corralation between TITAN MACHINERY and THAI BEVERAGE
Assuming the 90 days trading horizon TITAN MACHINERY is expected to generate 1.35 times more return on investment than THAI BEVERAGE. However, TITAN MACHINERY is 1.35 times more volatile than THAI BEVERAGE. It trades about 0.22 of its potential returns per unit of risk. THAI BEVERAGE is currently generating about 0.01 per unit of risk. If you would invest 1,340 in TITAN MACHINERY on October 26, 2024 and sell it today you would earn a total of 130.00 from holding TITAN MACHINERY or generate 9.7% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Weak |
Accuracy | 100.0% |
Values | Daily Returns |
TITAN MACHINERY vs. THAI BEVERAGE
Performance |
Timeline |
TITAN MACHINERY |
THAI BEVERAGE |
TITAN MACHINERY and THAI BEVERAGE Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with TITAN MACHINERY and THAI BEVERAGE
The main advantage of trading using opposite TITAN MACHINERY and THAI BEVERAGE positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if TITAN MACHINERY 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.TITAN MACHINERY vs. UNITED UTILITIES GR | TITAN MACHINERY vs. Canadian Utilities Limited | TITAN MACHINERY vs. CALTAGIRONE EDITORE | TITAN MACHINERY vs. ELL ENVIRONHLDGS HD 0001 |
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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 Portfolio Dashboard module to portfolio dashboard that provides centralized access to all your investments.
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