Correlation Between Laguna Resorts and Thai Industrial

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

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

Diversification Opportunities for Laguna Resorts and Thai Industrial

-0.32

Correlation Coefficient

Laguna Resorts  Thai Industrial

Very good diversification

The 3 months correlation between Laguna and Thai is -0.32. Overlapping area represents the amount of risk that can be diversified away by holding Laguna Resorts Hotels and Thai Industrial in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Thai Industrial and Laguna Resorts 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 Laguna Resorts Hotels are associated (or correlated) with Thai Industrial. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Thai Industrial has no effect on the direction of Laguna Resorts i.e., Laguna Resorts and Thai Industrial go up and down completely randomly.

Pair Corralation between Laguna Resorts and Thai Industrial

Assuming the 90 days trading horizon Laguna Resorts Hotels is expected to generate 0.68 times more return on investment than Thai Industrial. However, Laguna Resorts Hotels is 1.46 times less risky than Thai Industrial. It trades about 0.07 of its potential returns per unit of risk. Thai Industrial is currently generating about -0.01 per unit of risk. If you would invest  3,725  in Laguna Resorts Hotels on September 16, 2024 and sell it today you would earn a total of  150.00  from holding Laguna Resorts Hotels or generate 4.03% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	98.39%
Values	Daily Returns

Laguna Resorts Hotels  vs.  Thai Industrial

Laguna Resorts Hotels

Risk-Adjusted Performance

5 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Laguna Resorts Hotels are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. Despite quite persistent technical indicators, Laguna Resorts is not utilizing all of its potentials. The latest stock price mess, may contribute to short-term losses for the institutional investors.

Thai Industrial

Risk-Adjusted Performance

0 of 100

Very Weak

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

Pair Trading with Laguna Resorts and Thai Industrial

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

The idea behind Laguna Resorts Hotels and Thai 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 Theme Ratings module to determine theme ratings based on digital equity recommendations. Macroaxis theme ratings are based on combination of fundamental analysis and risk-adjusted market performance.