Correlation Between CTP NV and THAI BEVERAGE

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

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

Diversification Opportunities for CTP NV and THAI BEVERAGE

0.12

Correlation Coefficient

CTP NV  THAI BEVERAGE

Average diversification

The 3 months correlation between CTP and THAI is 0.12. Overlapping area represents the amount of risk that can be diversified away by holding CTP NV EO and THAI BEVERAGE in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on THAI BEVERAGE and CTP NV 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 CTP NV EO 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 CTP NV i.e., CTP NV and THAI BEVERAGE go up and down completely randomly.

Pair Corralation between CTP NV and THAI BEVERAGE

Assuming the 90 days horizon CTP NV EO is expected to generate 0.52 times more return on investment than THAI BEVERAGE. However, CTP NV EO is 1.93 times less risky than THAI BEVERAGE. It trades about -0.06 of its potential returns per unit of risk. THAI BEVERAGE is currently generating about -0.08 per unit of risk. If you would invest  1,510  in CTP NV EO on October 11, 2024 and sell it today you would lose (14.00) from holding CTP NV EO or give up 0.93% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	94.44%
Values	Daily Returns

CTP NV EO  vs.  THAI BEVERAGE

CTP NV EO

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days CTP NV EO has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest unsteady performance, the Stock's basic indicators remain stable and the current disturbance on Wall Street may also be a sign of long-run gains for the company stockholders.

THAI BEVERAGE

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in THAI BEVERAGE are ranked lower than 3 (%) 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 CTP NV and THAI BEVERAGE

The main advantage of trading using opposite CTP NV and THAI BEVERAGE positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if CTP NV 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 CTP NV EO 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 Price Ceiling Movement module to calculate and plot Price Ceiling Movement for different equity instruments.