Correlation Between Earth Tech and THONBURI HEALTHCARE

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

By analyzing existing cross correlation between Earth Tech Environment and THONBURI HEALTHCARE GRO NVDR, you can compare the effects of market volatilities on Earth Tech and THONBURI HEALTHCARE 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 Earth Tech with a short position of THONBURI HEALTHCARE. Check out your portfolio center. Please also check ongoing floating volatility patterns of Earth Tech and THONBURI HEALTHCARE.

Diversification Opportunities for Earth Tech and THONBURI HEALTHCARE

0.54

Correlation Coefficient

Earth Tech  THONBURI HEALTHCARE

Very weak diversification

The 3 months correlation between Earth and THONBURI is 0.54. Overlapping area represents the amount of risk that can be diversified away by holding Earth Tech Environment and THONBURI HEALTHCARE GRO NVDR in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on THONBURI HEALTHCARE GRO and Earth Tech 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 Earth Tech Environment are associated (or correlated) with THONBURI HEALTHCARE. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of THONBURI HEALTHCARE GRO has no effect on the direction of Earth Tech i.e., Earth Tech and THONBURI HEALTHCARE go up and down completely randomly.

Pair Corralation between Earth Tech and THONBURI HEALTHCARE

Assuming the 90 days trading horizon Earth Tech Environment is expected to generate 0.2 times more return on investment than THONBURI HEALTHCARE. However, Earth Tech Environment is 5.11 times less risky than THONBURI HEALTHCARE. It trades about -0.13 of its potential returns per unit of risk. THONBURI HEALTHCARE GRO NVDR is currently generating about -0.11 per unit of risk. If you would invest  222.00  in Earth Tech Environment on September 13, 2024 and sell it today you would lose (29.00) from holding Earth Tech Environment or give up 13.06% of portfolio value over 90 days.

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

Earth Tech Environment  vs.  THONBURI HEALTHCARE GRO NVDR

Earth Tech Environment

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Earth Tech Environment has generated negative risk-adjusted returns adding no value to investors with long positions. Despite conflicting performance in the last few months, the Stock's fundamental indicators remain quite persistent which may send shares a bit higher in January 2025. The latest mess may also be a sign of long-standing up-swing for the company institutional investors.

THONBURI HEALTHCARE GRO

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days THONBURI HEALTHCARE GRO NVDR has generated negative risk-adjusted returns adding no value to investors with long positions. Despite weak performance in the last few months, the Stock's fundamental drivers remain somewhat strong which may send shares a bit higher in January 2025. The current disturbance may also be a sign of long term up-swing for the company investors.

Pair Trading with Earth Tech and THONBURI HEALTHCARE

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

The idea behind Earth Tech Environment and THONBURI HEALTHCARE GRO NVDR 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.