Correlation Between Asia Metal and Thai Energy

Can any of the company-specific risk be diversified away by investing in both Asia Metal and Thai Energy 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 Asia Metal and Thai Energy into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Asia Metal Public and Thai Energy Storage, you can compare the effects of market volatilities on Asia Metal and Thai Energy 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 Asia Metal with a short position of Thai Energy. Check out your portfolio center. Please also check ongoing floating volatility patterns of Asia Metal and Thai Energy.

Diversification Opportunities for Asia Metal and Thai Energy

0.38

Correlation Coefficient

Asia Metal  Thai Energy

Weak diversification

The 3 months correlation between Asia and Thai is 0.38. Overlapping area represents the amount of risk that can be diversified away by holding Asia Metal Public and Thai Energy Storage in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Thai Energy Storage and Asia Metal 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 Asia Metal Public are associated (or correlated) with Thai Energy. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Thai Energy Storage has no effect on the direction of Asia Metal i.e., Asia Metal and Thai Energy go up and down completely randomly.

Pair Corralation between Asia Metal and Thai Energy

Assuming the 90 days trading horizon Asia Metal Public is expected to generate 0.14 times more return on investment than Thai Energy. However, Asia Metal Public is 7.39 times less risky than Thai Energy. It trades about -0.34 of its potential returns per unit of risk. Thai Energy Storage is currently generating about -0.42 per unit of risk. If you would invest  282.00  in Asia Metal Public on October 7, 2024 and sell it today you would lose (91.00) from holding Asia Metal Public or give up 32.27% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	31.58%
Values	Daily Returns

Asia Metal Public  vs.  Thai Energy Storage

Asia Metal Public

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Asia Metal Public has generated negative risk-adjusted returns adding no value to investors with long positions. Despite weak performance in the last few months, the Stock's fundamental indicators remain quite persistent which may send shares a bit higher in February 2025. The latest mess may also be a sign of long-standing up-swing for the company institutional investors.

Thai Energy Storage

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Thai Energy Storage has generated negative risk-adjusted returns adding no value to investors with long positions. Despite conflicting performance in the last few months, the Stock's basic indicators remain somewhat strong which may send shares a bit higher in February 2025. The current disturbance may also be a sign of long term up-swing for the company investors.

Pair Trading with Asia Metal and Thai Energy

The main advantage of trading using opposite Asia Metal and Thai Energy positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Asia Metal position performs unexpectedly, Thai Energy 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 Energy will offset losses from the drop in Thai Energy's long position.

The idea behind Asia Metal Public and Thai Energy Storage 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 Portfolio Manager module to state of the art Portfolio Manager to monitor and improve performance of your invested capital.