Correlation Between THAI BEVERAGE and Peijia Medical

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

By analyzing existing cross correlation between THAI BEVERAGE and Peijia Medical Limited, you can compare the effects of market volatilities on THAI BEVERAGE and Peijia Medical 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 BEVERAGE with a short position of Peijia Medical. Check out your portfolio center. Please also check ongoing floating volatility patterns of THAI BEVERAGE and Peijia Medical.

Diversification Opportunities for THAI BEVERAGE and Peijia Medical

0.21

Correlation Coefficient

THAI BEVERAGE  Peijia Medical

Modest diversification

The 3 months correlation between THAI and Peijia is 0.21. Overlapping area represents the amount of risk that can be diversified away by holding THAI BEVERAGE and Peijia Medical Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Peijia Medical and THAI BEVERAGE 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 BEVERAGE are associated (or correlated) with Peijia Medical. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Peijia Medical has no effect on the direction of THAI BEVERAGE i.e., THAI BEVERAGE and Peijia Medical go up and down completely randomly.

Pair Corralation between THAI BEVERAGE and Peijia Medical

Assuming the 90 days trading horizon THAI BEVERAGE is expected to under-perform the Peijia Medical. But the stock apears to be less risky and, when comparing its historical volatility, THAI BEVERAGE is 1.54 times less risky than Peijia Medical. The stock trades about -0.08 of its potential returns per unit of risk. The Peijia Medical Limited is currently generating about 0.06 of returns per unit of risk over similar time horizon. If you would invest  45.00  in Peijia Medical Limited on October 24, 2024 and sell it today you would earn a total of  1.00  from holding Peijia Medical Limited or generate 2.22% return on investment over 90 days.

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

THAI BEVERAGE  vs.  Peijia Medical Limited

THAI BEVERAGE

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days THAI BEVERAGE has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of rather sound basic indicators, THAI BEVERAGE is not utilizing all of its potentials. The current stock price tumult, may contribute to shorter-term losses for the shareholders.

Peijia Medical

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Peijia Medical Limited has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable basic indicators, Peijia Medical is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with THAI BEVERAGE and Peijia Medical

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

The idea behind THAI BEVERAGE and Peijia Medical Limited 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 Breakdown module to analyze constituents of all Macroaxis ideas. Macroaxis investment ideas are predefined, sector-focused investing themes.