Correlation Between Asia Metal and Thai Rubber

Can any of the company-specific risk be diversified away by investing in both Asia Metal and Thai Rubber 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 Rubber 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 Rubber Latex, you can compare the effects of market volatilities on Asia Metal and Thai Rubber 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 Rubber. Check out your portfolio center. Please also check ongoing floating volatility patterns of Asia Metal and Thai Rubber.

Diversification Opportunities for Asia Metal and Thai Rubber

0.74

Correlation Coefficient

Asia Metal  Thai Rubber

Poor diversification

The 3 months correlation between Asia and Thai is 0.74. Overlapping area represents the amount of risk that can be diversified away by holding Asia Metal Public and Thai Rubber Latex in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Thai Rubber Latex 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 Rubber. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Thai Rubber Latex has no effect on the direction of Asia Metal i.e., Asia Metal and Thai Rubber go up and down completely randomly.

Pair Corralation between Asia Metal and Thai Rubber

Assuming the 90 days trading horizon Asia Metal Public is expected to under-perform the Thai Rubber. But the stock apears to be less risky and, when comparing its historical volatility, Asia Metal Public is 1.91 times less risky than Thai Rubber. The stock trades about -0.17 of its potential returns per unit of risk. The Thai Rubber Latex is currently generating about -0.07 of returns per unit of risk over similar time horizon. If you would invest  119.00  in Thai Rubber Latex on September 13, 2024 and sell it today you would lose (13.00) from holding Thai Rubber Latex or give up 10.92% of portfolio value over 90 days.

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

Asia Metal Public  vs.  Thai Rubber Latex

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 conflicting performance in the last few months, the Stock's fundamental indicators remain quite persistent which may send shares a bit higher in January 2025. The latest mess may also be a sign of long-standing up-swing for the company institutional investors.

Thai Rubber Latex

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Thai Rubber Latex has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest conflicting performance, the Stock's fundamental drivers remain strong and the current disturbance on Wall Street may also be a sign of long term gains for the company investors.

Pair Trading with Asia Metal and Thai Rubber

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

The idea behind Asia Metal Public and Thai Rubber Latex 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 My Watchlist Analysis module to analyze my current watchlist and to refresh optimization strategy. Macroaxis watchlist is based on self-learning algorithm to remember stocks you like.