Correlation Between Allianz Ayudhya and Thai Industrial

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

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

Diversification Opportunities for Allianz Ayudhya and Thai Industrial

-0.65

Correlation Coefficient

Allianz Ayudhya  Thai Industrial

Excellent diversification

The 3 months correlation between Allianz and Thai is -0.65. Overlapping area represents the amount of risk that can be diversified away by holding Allianz Ayudhya Capital and Thai Industrial in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Thai Industrial and Allianz Ayudhya 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 Allianz Ayudhya Capital are associated (or correlated) with Thai Industrial. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Thai Industrial has no effect on the direction of Allianz Ayudhya i.e., Allianz Ayudhya and Thai Industrial go up and down completely randomly.

Pair Corralation between Allianz Ayudhya and Thai Industrial

Assuming the 90 days trading horizon Allianz Ayudhya Capital is expected to generate 1.07 times more return on investment than Thai Industrial. However, Allianz Ayudhya is 1.07 times more volatile than Thai Industrial. It trades about 0.02 of its potential returns per unit of risk. Thai Industrial is currently generating about -0.12 per unit of risk. If you would invest  3,150  in Allianz Ayudhya Capital on December 27, 2024 and sell it today you would earn a total of  25.00  from holding Allianz Ayudhya Capital or generate 0.79% return on investment over 90 days.

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

Allianz Ayudhya Capital  vs.  Thai Industrial

Allianz Ayudhya Capital

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Allianz Ayudhya Capital are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. Despite quite persistent forward-looking signals, Allianz Ayudhya is not utilizing all of its potentials. The current stock price mess, may contribute to short-term losses for the institutional investors.

Thai Industrial

Risk-Adjusted Performance

Very Weak

Over the last 90 days Thai Industrial has generated negative risk-adjusted returns adding no value to investors with long positions. Despite quite persistent forward-looking signals, Thai Industrial is not utilizing all of its potentials. The latest stock price mess, may contribute to short-term losses for the institutional investors.

Pair Trading with Allianz Ayudhya and Thai Industrial

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

The idea behind Allianz Ayudhya Capital and Thai Industrial 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 Watchlist Optimization module to optimize watchlists to build efficient portfolios or rebalance existing positions based on the mean-variance optimization algorithm.