Correlation Between Internet Thailand and Highlight Communications

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

By analyzing existing cross correlation between Internet Thailand PCL and Highlight Communications AG, you can compare the effects of market volatilities on Internet Thailand and Highlight Communications 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 Internet Thailand with a short position of Highlight Communications. Check out your portfolio center. Please also check ongoing floating volatility patterns of Internet Thailand and Highlight Communications.

Diversification Opportunities for Internet Thailand and Highlight Communications

0.23

Correlation Coefficient

Internet Thailand  Highlight Communications

Modest diversification

The 3 months correlation between Internet and Highlight is 0.23. Overlapping area represents the amount of risk that can be diversified away by holding Internet Thailand PCL and Highlight Communications AG in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Highlight Communications and Internet Thailand 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 Internet Thailand PCL are associated (or correlated) with Highlight Communications. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Highlight Communications has no effect on the direction of Internet Thailand i.e., Internet Thailand and Highlight Communications go up and down completely randomly.

Pair Corralation between Internet Thailand and Highlight Communications

Assuming the 90 days trading horizon Internet Thailand is expected to generate 1.31 times less return on investment than Highlight Communications. In addition to that, Internet Thailand is 1.24 times more volatile than Highlight Communications AG. It trades about 0.12 of its total potential returns per unit of risk. Highlight Communications AG is currently generating about 0.19 per unit of volatility. If you would invest  98.00  in Highlight Communications AG on October 23, 2024 and sell it today you would earn a total of  56.00  from holding Highlight Communications AG or generate 57.14% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	98.33%
Values	Daily Returns

Internet Thailand PCL  vs.  Highlight Communications AG

Internet Thailand PCL

Risk-Adjusted Performance

9 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Internet Thailand PCL are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively fragile basic indicators, Internet Thailand unveiled solid returns over the last few months and may actually be approaching a breakup point.

Highlight Communications

Risk-Adjusted Performance

15 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Highlight Communications AG are ranked lower than 15 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively fragile technical and fundamental indicators, Highlight Communications unveiled solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Internet Thailand and Highlight Communications

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

The idea behind Internet Thailand PCL and Highlight Communications AG 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 Portfolio Manager module to state of the art Portfolio Manager to monitor and improve performance of your invested capital.