Correlation Between Home Pottery and Thai Ha

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

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

Diversification Opportunities for Home Pottery and Thai Ha

0.82

Correlation Coefficient

Home Pottery  Thai Ha

Very poor diversification

The 3 months correlation between Home and Thai is 0.82. Overlapping area represents the amount of risk that can be diversified away by holding Home Pottery Public and Thai Ha Public in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Thai Ha Public and Home Pottery 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 Home Pottery Public are associated (or correlated) with Thai Ha. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Thai Ha Public has no effect on the direction of Home Pottery i.e., Home Pottery and Thai Ha go up and down completely randomly.

Pair Corralation between Home Pottery and Thai Ha

Assuming the 90 days trading horizon Home Pottery Public is expected to generate 0.75 times more return on investment than Thai Ha. However, Home Pottery Public is 1.33 times less risky than Thai Ha. It trades about -0.04 of its potential returns per unit of risk. Thai Ha Public is currently generating about -0.24 per unit of risk. If you would invest  45.00  in Home Pottery Public on December 26, 2024 and sell it today you would lose (3.00) from holding Home Pottery Public or give up 6.67% of portfolio value over 90 days.

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

Home Pottery Public  vs.  Thai Ha Public

Home Pottery Public

Risk-Adjusted Performance

Very Weak

Over the last 90 days Home Pottery Public has generated negative risk-adjusted returns adding no value to investors with long positions. Despite quite persistent basic indicators, Home Pottery is not utilizing all of its potentials. The latest stock price mess, may contribute to short-term losses for the institutional investors.

Thai Ha Public

Risk-Adjusted Performance

Very Weak

Over the last 90 days Thai Ha Public 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 drivers remain somewhat strong which may send shares a bit higher in April 2025. The current disturbance may also be a sign of long term up-swing for the company investors.

Pair Trading with Home Pottery and Thai Ha

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

The idea behind Home Pottery Public and Thai Ha 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 Price Ceiling Movement module to calculate and plot Price Ceiling Movement for different equity instruments.