Correlation Between BRP and Thai Beverage

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

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

Diversification Opportunities for BRP and Thai Beverage

0.0

Correlation Coefficient

BRP  Thai Beverage

Pay attention - limited upside

The 3 months correlation between BRP and Thai is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding BRP Inc and Thai Beverage PCL in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Thai Beverage PCL and BRP 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 BRP Inc are associated (or correlated) with Thai Beverage. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Thai Beverage PCL has no effect on the direction of BRP i.e., BRP and Thai Beverage go up and down completely randomly.

Pair Corralation between BRP and Thai Beverage

Given the investment horizon of 90 days BRP Inc is expected to generate 1.14 times more return on investment than Thai Beverage. However, BRP is 1.14 times more volatile than Thai Beverage PCL. It trades about -0.02 of its potential returns per unit of risk. Thai Beverage PCL is currently generating about -0.06 per unit of risk. If you would invest  7,406  in BRP Inc on September 18, 2024 and sell it today you would lose (2,331) from holding BRP Inc or give up 31.47% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Flat
Strength	Insignificant
Accuracy	60.2%
Values	Daily Returns

BRP Inc  vs.  Thai Beverage PCL

BRP Inc

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days BRP Inc has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of weak performance in the last few months, the Stock's basic indicators remain very healthy which may send shares a bit higher in January 2025. The recent disarray may also be a sign of long period up-swing for the firm investors.

Thai Beverage PCL

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Thai Beverage PCL has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly strong basic indicators, Thai Beverage is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with BRP and Thai Beverage

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

The idea behind BRP Inc and Thai Beverage PCL 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 Balance Of Power module to check stock momentum by analyzing Balance Of Power indicator and other technical ratios.