Correlation Between Carabao Group and AEON Thana

Can any of the company-specific risk be diversified away by investing in both Carabao Group and AEON Thana 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 Carabao Group and AEON Thana into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Carabao Group Public and AEON Thana Sinsap, you can compare the effects of market volatilities on Carabao Group and AEON Thana 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 Carabao Group with a short position of AEON Thana. Check out your portfolio center. Please also check ongoing floating volatility patterns of Carabao Group and AEON Thana.

Diversification Opportunities for Carabao Group and AEON Thana

0.85

Correlation Coefficient

Carabao Group  AEON Thana

Very poor diversification

The 3 months correlation between Carabao and AEON is 0.85. Overlapping area represents the amount of risk that can be diversified away by holding Carabao Group Public and AEON Thana Sinsap in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on AEON Thana Sinsap and Carabao Group 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 Carabao Group Public are associated (or correlated) with AEON Thana. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of AEON Thana Sinsap has no effect on the direction of Carabao Group i.e., Carabao Group and AEON Thana go up and down completely randomly.

Pair Corralation between Carabao Group and AEON Thana

Assuming the 90 days trading horizon Carabao Group Public is expected to under-perform the AEON Thana. In addition to that, Carabao Group is 1.04 times more volatile than AEON Thana Sinsap. It trades about -0.08 of its total potential returns per unit of risk. AEON Thana Sinsap is currently generating about -0.06 per unit of volatility. If you would invest  11,850  in AEON Thana Sinsap on December 1, 2024 and sell it today you would lose (1,000.00) from holding AEON Thana Sinsap or give up 8.44% of portfolio value over 90 days.

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

Carabao Group Public  vs.  AEON Thana Sinsap

Carabao Group Public

Risk-Adjusted Performance

Very Weak

Over the last 90 days Carabao Group Public has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest weak performance, the Stock's technical and fundamental indicators remain persistent and the latest mess on Wall Street may also be a sign of long-standing gains for the company institutional investors.

AEON Thana Sinsap

Risk-Adjusted Performance

Very Weak

Over the last 90 days AEON Thana Sinsap has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest conflicting performance, the Stock's basic indicators 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 Carabao Group and AEON Thana

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

The idea behind Carabao Group Public and AEON Thana Sinsap 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 Suggestion module to get suggestions outside of your existing asset allocation including your own model portfolios.