Correlation Between AP Public and Thai Film

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

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

Diversification Opportunities for AP Public and Thai Film

0.42

Correlation Coefficient

AP Public  Thai Film

Very weak diversification

The 3 months correlation between AP Public and Thai is 0.42. Overlapping area represents the amount of risk that can be diversified away by holding AP Public and Thai Film Industries in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Thai Film Industries and AP Public 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 AP Public are associated (or correlated) with Thai Film. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Thai Film Industries has no effect on the direction of AP Public i.e., AP Public and Thai Film go up and down completely randomly.

Pair Corralation between AP Public and Thai Film

Assuming the 90 days horizon AP Public is expected to generate 262.45 times less return on investment than Thai Film. But when comparing it to its historical volatility, AP Public is 67.45 times less risky than Thai Film. It trades about 0.03 of its potential returns per unit of risk. Thai Film Industries is currently generating about 0.13 of returns per unit of risk over similar time horizon. If you would invest  0.00  in Thai Film Industries on September 3, 2024 and sell it today you would earn a total of  8.00  from holding Thai Film Industries or generate 9.223372036854776E16% return on investment over 90 days.

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

AP Public  vs.  Thai Film Industries

AP Public

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in AP Public are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. Despite quite persistent fundamental drivers, AP Public is not utilizing all of its potentials. The latest stock price mess, may contribute to short-term losses for the institutional investors.

Thai Film Industries

Risk-Adjusted Performance

10 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Thai Film Industries are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. Despite quite conflicting forward indicators, Thai Film disclosed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with AP Public and Thai Film

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

The idea behind AP Public and Thai Film Industries 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.

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 Price Exposure Probability module to analyze equity upside and downside potential for a given time horizon across multiple markets.