Correlation Between IMPERIAL TOBACCO and THAI BEVERAGE

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Can any of the company-specific risk be diversified away by investing in both IMPERIAL TOBACCO 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 IMPERIAL TOBACCO and THAI BEVERAGE into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between IMPERIAL TOBACCO and THAI BEVERAGE, you can compare the effects of market volatilities on IMPERIAL TOBACCO 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 IMPERIAL TOBACCO with a short position of THAI BEVERAGE. Check out your portfolio center. Please also check ongoing floating volatility patterns of IMPERIAL TOBACCO and THAI BEVERAGE.

Diversification Opportunities for IMPERIAL TOBACCO and THAI BEVERAGE

IMPERIALTHAIDiversified AwayIMPERIALTHAIDiversified Away100%
0.64
  Correlation Coefficient

Poor diversification

The 3 months correlation between IMPERIAL and THAI is 0.64. Overlapping area represents the amount of risk that can be diversified away by holding IMPERIAL TOBACCO and THAI BEVERAGE in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on THAI BEVERAGE and IMPERIAL TOBACCO 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 IMPERIAL TOBACCO 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 has no effect on the direction of IMPERIAL TOBACCO i.e., IMPERIAL TOBACCO and THAI BEVERAGE go up and down completely randomly.

Pair Corralation between IMPERIAL TOBACCO and THAI BEVERAGE

Assuming the 90 days trading horizon IMPERIAL TOBACCO is expected to generate 0.43 times more return on investment than THAI BEVERAGE. However, IMPERIAL TOBACCO is 2.32 times less risky than THAI BEVERAGE. It trades about 0.28 of its potential returns per unit of risk. THAI BEVERAGE is currently generating about 0.01 per unit of risk. If you would invest  2,708  in IMPERIAL TOBACCO on October 31, 2024 and sell it today you would earn a total of  459.00  from holding IMPERIAL TOBACCO or generate 16.95% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthSignificant
Accuracy100.0%
ValuesDaily Returns

IMPERIAL TOBACCO   vs.  THAI BEVERAGE

 Performance 
JavaScript chart by amCharts 3.21.15NovDec2025 -5051015
JavaScript chart by amCharts 3.21.15ITB T6W
       Timeline  
IMPERIAL TOBACCO 

Risk-Adjusted Performance

21 of 100

 
Weak
 
Strong
Solid
Compared to the overall equity markets, risk-adjusted returns on investments in IMPERIAL TOBACCO are ranked lower than 21 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain fundamental drivers, IMPERIAL TOBACCO unveiled solid returns over the last few months and may actually be approaching a breakup point.
JavaScript chart by amCharts 3.21.15NovDecJanDecJan2728293031
THAI BEVERAGE 

Risk-Adjusted Performance

0 of 100

 
Weak
 
Strong
Very Weak
Over the last 90 days THAI BEVERAGE has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of rather sound basic indicators, THAI BEVERAGE is not utilizing all of its potentials. The newest stock price tumult, may contribute to shorter-term losses for the shareholders.
JavaScript chart by amCharts 3.21.15NovDecJanDecJan0.340.350.360.370.380.390.4

IMPERIAL TOBACCO and THAI BEVERAGE Volatility Contrast

   Predicted Return Density   
JavaScript chart by amCharts 3.21.15-2.86-2.14-1.42-0.71-0.0120.791.622.443.264.08 0.10.20.30.4
JavaScript chart by amCharts 3.21.15ITB T6W
       Returns  

Pair Trading with IMPERIAL TOBACCO and THAI BEVERAGE

The main advantage of trading using opposite IMPERIAL TOBACCO and THAI BEVERAGE positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if IMPERIAL TOBACCO 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 IMPERIAL TOBACCO and THAI BEVERAGE 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.

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