Correlation Between Thai Credit and Grande Asset

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

By analyzing existing cross correlation between Thai Credit Pcl and Grande Asset Hotels, you can compare the effects of market volatilities on Thai Credit and Grande Asset 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 Thai Credit with a short position of Grande Asset. Check out your portfolio center. Please also check ongoing floating volatility patterns of Thai Credit and Grande Asset.

Diversification Opportunities for Thai Credit and Grande Asset

0.12

Correlation Coefficient

Thai Credit  Grande Asset

Average diversification

The 3 months correlation between Thai and Grande is 0.12. Overlapping area represents the amount of risk that can be diversified away by holding Thai Credit Pcl and Grande Asset Hotels in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Grande Asset Hotels and Thai Credit 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 Thai Credit Pcl are associated (or correlated) with Grande Asset. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Grande Asset Hotels has no effect on the direction of Thai Credit i.e., Thai Credit and Grande Asset go up and down completely randomly.

Pair Corralation between Thai Credit and Grande Asset

Assuming the 90 days trading horizon Thai Credit Pcl is expected to generate 1.49 times more return on investment than Grande Asset. However, Thai Credit is 1.49 times more volatile than Grande Asset Hotels. It trades about 0.06 of its potential returns per unit of risk. Grande Asset Hotels is currently generating about 0.04 per unit of risk. If you would invest  2,750  in Thai Credit Pcl on September 16, 2024 and sell it today you would lose (940.00) from holding Thai Credit Pcl or give up 34.18% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	44.69%
Values	Daily Returns

Thai Credit Pcl  vs.  Grande Asset Hotels

Thai Credit Pcl

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Thai Credit Pcl has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong technical and fundamental indicators, Thai Credit is not utilizing all of its potentials. The latest stock price disturbance, may contribute to short-term losses for the investors.

Grande Asset Hotels

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Grande Asset Hotels has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest weak 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 Thai Credit and Grande Asset

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

The idea behind Thai Credit Pcl and Grande Asset Hotels 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 Sectors module to list of equity sectors categorizing publicly traded companies based on their primary business activities.