Correlation Between Regional Container and Thai Rayon

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

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

Diversification Opportunities for Regional Container and Thai Rayon

-0.52

Correlation Coefficient

Regional Container  Thai Rayon

Excellent diversification

The 3 months correlation between Regional and Thai is -0.52. Overlapping area represents the amount of risk that can be diversified away by holding Regional Container Lines and Thai Rayon Public in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Thai Rayon Public and Regional Container 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 Regional Container Lines are associated (or correlated) with Thai Rayon. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Thai Rayon Public has no effect on the direction of Regional Container i.e., Regional Container and Thai Rayon go up and down completely randomly.

Pair Corralation between Regional Container and Thai Rayon

Assuming the 90 days trading horizon Regional Container Lines is expected to generate 14.43 times more return on investment than Thai Rayon. However, Regional Container is 14.43 times more volatile than Thai Rayon Public. It trades about 0.02 of its potential returns per unit of risk. Thai Rayon Public is currently generating about -0.17 per unit of risk. If you would invest  2,478  in Regional Container Lines on October 27, 2024 and sell it today you would earn a total of  22.00  from holding Regional Container Lines or generate 0.89% return on investment over 90 days.

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

Regional Container Lines  vs.  Thai Rayon Public

Regional Container Lines

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Regional Container Lines are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. Despite quite persistent essential indicators, Regional Container is not utilizing all of its potentials. The latest stock price mess, may contribute to short-term losses for the institutional investors.

Thai Rayon Public

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Thai Rayon Public has generated negative risk-adjusted returns adding no value to investors with long positions. Despite quite persistent fundamental drivers, Thai Rayon 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 Regional Container and Thai Rayon

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

The idea behind Regional Container Lines and Thai Rayon 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 Stock Tickers module to use high-impact, comprehensive, and customizable stock tickers that can be easily integrated to any websites.