Correlation Between Thai Stanley and President Automobile

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

Diversification Opportunities for Thai Stanley and President Automobile

0.04
  Correlation Coefficient

Significant diversification

The 3 months correlation between Thai and President is 0.04. Overlapping area represents the amount of risk that can be diversified away by holding Thai Stanley Electric and President Automobile Industrie in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on President Automobile and Thai Stanley 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 Thai Stanley Electric are associated (or correlated) with President Automobile. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of President Automobile has no effect on the direction of Thai Stanley i.e., Thai Stanley and President Automobile go up and down completely randomly.

Pair Corralation between Thai Stanley and President Automobile

Assuming the 90 days trading horizon Thai Stanley Electric is expected to generate 0.81 times more return on investment than President Automobile. However, Thai Stanley Electric is 1.23 times less risky than President Automobile. It trades about 0.01 of its potential returns per unit of risk. President Automobile Industries is currently generating about -0.03 per unit of risk. If you would invest  21,591  in Thai Stanley Electric on December 2, 2024 and sell it today you would earn a total of  209.00  from holding Thai Stanley Electric or generate 0.97% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthInsignificant
Accuracy99.58%
ValuesDaily Returns

Thai Stanley Electric  vs.  President Automobile Industrie

 Performance 
       Timeline  
Thai Stanley Electric 

Risk-Adjusted Performance

Very Weak

 
Weak
 
Strong
Over the last 90 days Thai Stanley Electric has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong basic indicators, Thai Stanley is not utilizing all of its potentials. The latest stock price disturbance, may contribute to short-term losses for the investors.
President Automobile 

Risk-Adjusted Performance

Modest

 
Weak
 
Strong
Compared to the overall equity markets, risk-adjusted returns on investments in President Automobile Industries are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. Despite quite conflicting forward-looking signals, President Automobile may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Thai Stanley and President Automobile Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Thai Stanley and President Automobile

The main advantage of trading using opposite Thai Stanley and President Automobile positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Thai Stanley position performs unexpectedly, President Automobile 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 President Automobile will offset losses from the drop in President Automobile's long position.
The idea behind Thai Stanley Electric and President Automobile Industries 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 Technical Analysis module to check basic technical indicators and analysis based on most latest market data.

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