Correlation Between MUTUIONLINE and Internet Thailand

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

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

Diversification Opportunities for MUTUIONLINE and Internet Thailand

0.83

Correlation Coefficient

MUTUIONLINE  Internet Thailand

Very poor diversification

The 3 months correlation between MUTUIONLINE and Internet is 0.83. Overlapping area represents the amount of risk that can be diversified away by holding MUTUIONLINE and Internet Thailand PCL in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Internet Thailand PCL and MUTUIONLINE 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 MUTUIONLINE are associated (or correlated) with Internet Thailand. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Internet Thailand PCL has no effect on the direction of MUTUIONLINE i.e., MUTUIONLINE and Internet Thailand go up and down completely randomly.

Pair Corralation between MUTUIONLINE and Internet Thailand

Assuming the 90 days trading horizon MUTUIONLINE is expected to generate 19.22 times less return on investment than Internet Thailand. But when comparing it to its historical volatility, MUTUIONLINE is 21.97 times less risky than Internet Thailand. It trades about 0.05 of its potential returns per unit of risk. Internet Thailand PCL is currently generating about 0.04 of returns per unit of risk over similar time horizon. If you would invest  13.00  in Internet Thailand PCL on September 23, 2024 and sell it today you would earn a total of  3.00  from holding Internet Thailand PCL or generate 23.08% return on investment over 90 days.

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

MUTUIONLINE  vs.  Internet Thailand PCL

MUTUIONLINE

Risk-Adjusted Performance

11 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in MUTUIONLINE are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. In spite of rather uncertain essential indicators, MUTUIONLINE exhibited solid returns over the last few months and may actually be approaching a breakup point.

Internet Thailand PCL

Risk-Adjusted Performance

8 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Internet Thailand PCL are ranked lower than 8 (%) 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.

Pair Trading with MUTUIONLINE and Internet Thailand

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

The idea behind MUTUIONLINE and Internet Thailand PCL 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.

Check out your portfolio center.

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 Sectors module to list of equity sectors categorizing publicly traded companies based on their primary business activities.