Correlation Between Italian Thai and Ocean Glass

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

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

Diversification Opportunities for Italian Thai and Ocean Glass

0.78

Correlation Coefficient

Italian Thai  Ocean Glass

Poor diversification

The 3 months correlation between Italian and Ocean is 0.78. Overlapping area represents the amount of risk that can be diversified away by holding Italian Thai Development Publi and Ocean Glass Public in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Ocean Glass Public and Italian Thai 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 Italian Thai Development Public are associated (or correlated) with Ocean Glass. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Ocean Glass Public has no effect on the direction of Italian Thai i.e., Italian Thai and Ocean Glass go up and down completely randomly.

Pair Corralation between Italian Thai and Ocean Glass

Assuming the 90 days trading horizon Italian Thai Development Public is expected to under-perform the Ocean Glass. But the stock apears to be less risky and, when comparing its historical volatility, Italian Thai Development Public is 2.5 times less risky than Ocean Glass. The stock trades about -0.77 of its potential returns per unit of risk. The Ocean Glass Public is currently generating about -0.23 of returns per unit of risk over similar time horizon. If you would invest  1,550  in Ocean Glass Public on December 4, 2024 and sell it today you would lose (490.00) from holding Ocean Glass Public or give up 31.61% of portfolio value over 90 days.

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

Italian Thai Development Publi  vs.  Ocean Glass Public

Italian Thai Develop

Risk-Adjusted Performance

Very Weak

Over the last 90 days Italian Thai Development 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 indicators remain quite persistent which may send shares a bit higher in April 2025. The latest mess may also be a sign of long-standing up-swing for the company institutional investors.

Ocean Glass Public

Risk-Adjusted Performance

Very Weak

Over the last 90 days Ocean Glass 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 indicators remain quite persistent which may send shares a bit higher in April 2025. The latest mess may also be a sign of long-standing up-swing for the company institutional investors.

Pair Trading with Italian Thai and Ocean Glass

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

The idea behind Italian Thai Development Public and Ocean Glass 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 Equity Valuation module to check real value of public entities based on technical and fundamental data.