Correlation Between Sun Country and Thai Beverage

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Can any of the company-specific risk be diversified away by investing in both Sun Country and Thai Beverage 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 Sun Country and Thai Beverage into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Sun Country Airlines and Thai Beverage PCL, you can compare the effects of market volatilities on Sun Country and Thai Beverage 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 Sun Country with a short position of Thai Beverage. Check out your portfolio center. Please also check ongoing floating volatility patterns of Sun Country and Thai Beverage.

Diversification Opportunities for Sun Country and Thai Beverage

-0.2
  Correlation Coefficient

Good diversification

The 3 months correlation between Sun and Thai is -0.2. Overlapping area represents the amount of risk that can be diversified away by holding Sun Country Airlines and Thai Beverage PCL in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Thai Beverage PCL and Sun Country 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 Sun Country Airlines are associated (or correlated) with Thai Beverage. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Thai Beverage PCL has no effect on the direction of Sun Country i.e., Sun Country and Thai Beverage go up and down completely randomly.

Pair Corralation between Sun Country and Thai Beverage

Given the investment horizon of 90 days Sun Country Airlines is expected to under-perform the Thai Beverage. In addition to that, Sun Country is 5.63 times more volatile than Thai Beverage PCL. It trades about -0.04 of its total potential returns per unit of risk. Thai Beverage PCL is currently generating about 0.13 per unit of volatility. If you would invest  3,231  in Thai Beverage PCL on December 27, 2024 and sell it today you would earn a total of  136.00  from holding Thai Beverage PCL or generate 4.21% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Against 
StrengthInsignificant
Accuracy98.36%
ValuesDaily Returns

Sun Country Airlines  vs.  Thai Beverage PCL

 Performance 
       Timeline  
Sun Country Airlines 

Risk-Adjusted Performance

Very Weak

 
Weak
 
Strong
Over the last 90 days Sun Country Airlines has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest unsteady performance, the Stock's fundamental indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for the company investors.
Thai Beverage PCL 

Risk-Adjusted Performance

OK

 
Weak
 
Strong
Compared to the overall equity markets, risk-adjusted returns on investments in Thai Beverage PCL are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. In spite of fairly strong basic indicators, Thai Beverage is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Sun Country and Thai Beverage Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Sun Country and Thai Beverage

The main advantage of trading using opposite Sun Country and Thai Beverage positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Sun Country position performs unexpectedly, Thai Beverage 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 Beverage will offset losses from the drop in Thai Beverage's long position.
The idea behind Sun Country Airlines and Thai Beverage 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.
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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 Positions Ratings module to determine portfolio positions ratings based on digital equity recommendations. Macroaxis instant position ratings are based on combination of fundamental analysis and risk-adjusted market performance.

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