Correlation Between GUDANG GARAM and Thai Beverage

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

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

Diversification Opportunities for GUDANG GARAM and Thai Beverage

-0.06

Correlation Coefficient

GUDANG GARAM  Thai Beverage

Good diversification

The 3 months correlation between GUDANG and Thai is -0.06. Overlapping area represents the amount of risk that can be diversified away by holding GUDANG GARAM and Thai Beverage Public in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Thai Beverage Public and GUDANG GARAM 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 GUDANG GARAM 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 Public has no effect on the direction of GUDANG GARAM i.e., GUDANG GARAM and Thai Beverage go up and down completely randomly.

Pair Corralation between GUDANG GARAM and Thai Beverage

Assuming the 90 days trading horizon GUDANG GARAM is expected to under-perform the Thai Beverage. But the stock apears to be less risky and, when comparing its historical volatility, GUDANG GARAM is 2.43 times less risky than Thai Beverage. The stock trades about -0.08 of its potential returns per unit of risk. The Thai Beverage Public is currently generating about 0.05 of returns per unit of risk over similar time horizon. If you would invest  22.00  in Thai Beverage Public on September 12, 2024 and sell it today you would earn a total of  16.00  from holding Thai Beverage Public or generate 72.73% return on investment over 90 days.

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

GUDANG GARAM  vs.  Thai Beverage Public

GUDANG GARAM

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days GUDANG GARAM has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest fragile performance, the Stock's technical and fundamental indicators remain sound and the latest tumult on Wall Street may also be a sign of longer-term gains for the firm shareholders.

Thai Beverage Public

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Thai Beverage Public are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, Thai Beverage may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with GUDANG GARAM and Thai Beverage

The main advantage of trading using opposite GUDANG GARAM and Thai Beverage positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if GUDANG GARAM 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 GUDANG GARAM and Thai Beverage Public 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 Cryptocurrency Center module to build and monitor diversified portfolio of extremely risky digital assets and cryptocurrency.