Correlation Between Indara Insurance and Thai Coating

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

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

Diversification Opportunities for Indara Insurance and Thai Coating

-0.11

Correlation Coefficient

Indara Insurance  Thai Coating

Good diversification

The 3 months correlation between Indara and Thai is -0.11. Overlapping area represents the amount of risk that can be diversified away by holding Indara Insurance Public and Thai Coating Industrial in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Thai Coating Industrial and Indara Insurance 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 Indara Insurance Public are associated (or correlated) with Thai Coating. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Thai Coating Industrial has no effect on the direction of Indara Insurance i.e., Indara Insurance and Thai Coating go up and down completely randomly.

Pair Corralation between Indara Insurance and Thai Coating

Assuming the 90 days trading horizon Indara Insurance Public is expected to generate 13.78 times more return on investment than Thai Coating. However, Indara Insurance is 13.78 times more volatile than Thai Coating Industrial. It trades about 0.04 of its potential returns per unit of risk. Thai Coating Industrial is currently generating about 0.01 per unit of risk. If you would invest  22,000  in Indara Insurance Public on October 13, 2024 and sell it today you would lose (14,300) from holding Indara Insurance Public or give up 65.0% of portfolio value over 90 days.

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

Indara Insurance Public  vs.  Thai Coating Industrial

Indara Insurance Public

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Indara Insurance 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 basic indicators remain somewhat strong which may send shares a bit higher in February 2025. The current disturbance may also be a sign of long term up-swing for the company investors.

Thai Coating Industrial

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Thai Coating Industrial has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong fundamental drivers, Thai Coating is not utilizing all of its potentials. The latest stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Indara Insurance and Thai Coating

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

The idea behind Indara Insurance Public and Thai Coating Industrial 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 AI Portfolio Architect module to use AI to generate optimal portfolios and find profitable investment opportunities.