Correlation Between Muang Thai and Sun Vending

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

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

Diversification Opportunities for Muang Thai and Sun Vending

-0.35

Correlation Coefficient

Muang Thai  Sun Vending

Very good diversification

The 3 months correlation between Muang and Sun is -0.35. Overlapping area represents the amount of risk that can be diversified away by holding Muang Thai Insurance and Sun Vending Technology in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sun Vending Technology and Muang 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 Muang Thai Insurance are associated (or correlated) with Sun Vending. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Sun Vending Technology has no effect on the direction of Muang Thai i.e., Muang Thai and Sun Vending go up and down completely randomly.

Pair Corralation between Muang Thai and Sun Vending

Assuming the 90 days trading horizon Muang Thai Insurance is expected to generate 0.72 times more return on investment than Sun Vending. However, Muang Thai Insurance is 1.39 times less risky than Sun Vending. It trades about 0.15 of its potential returns per unit of risk. Sun Vending Technology is currently generating about 0.01 per unit of risk. If you would invest  9,863  in Muang Thai Insurance on December 20, 2024 and sell it today you would earn a total of  1,137  from holding Muang Thai Insurance or generate 11.53% return on investment over 90 days.

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

Muang Thai Insurance  vs.  Sun Vending Technology

Muang Thai Insurance

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Muang Thai Insurance are ranked lower than 12 (%) of all global equities and portfolios over the last 90 days. Despite quite weak forward indicators, Muang Thai may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Sun Vending Technology

Risk-Adjusted Performance

Very Weak

Over the last 90 days Sun Vending Technology has generated negative risk-adjusted returns adding no value to investors with long positions. Despite quite persistent basic indicators, Sun Vending 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 Muang Thai and Sun Vending

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

The idea behind Muang Thai Insurance and Sun Vending Technology 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 Idea Analyzer module to analyze all characteristics, volatility and risk-adjusted return of Macroaxis ideas.