Correlation Between THAI BEVERAGE and SOFI TECHNOLOGIES

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

By analyzing existing cross correlation between THAI BEVERAGE and SOFI TECHNOLOGIES, you can compare the effects of market volatilities on THAI BEVERAGE and SOFI TECHNOLOGIES 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 SOFI TECHNOLOGIES. Check out your portfolio center. Please also check ongoing floating volatility patterns of THAI BEVERAGE and SOFI TECHNOLOGIES.

Diversification Opportunities for THAI BEVERAGE and SOFI TECHNOLOGIES

0.53

Correlation Coefficient

THAI BEVERAGE  SOFI TECHNOLOGIES

Very weak diversification

The 3 months correlation between THAI and SOFI is 0.53. Overlapping area represents the amount of risk that can be diversified away by holding THAI BEVERAGE and SOFI TECHNOLOGIES in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SOFI TECHNOLOGIES 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 SOFI TECHNOLOGIES. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of SOFI TECHNOLOGIES has no effect on the direction of THAI BEVERAGE i.e., THAI BEVERAGE and SOFI TECHNOLOGIES go up and down completely randomly.

Pair Corralation between THAI BEVERAGE and SOFI TECHNOLOGIES

Assuming the 90 days trading horizon THAI BEVERAGE is expected to generate 1.19 times less return on investment than SOFI TECHNOLOGIES. In addition to that, THAI BEVERAGE is 1.18 times more volatile than SOFI TECHNOLOGIES. It trades about 0.05 of its total potential returns per unit of risk. SOFI TECHNOLOGIES is currently generating about 0.08 per unit of volatility. If you would invest  444.00  in SOFI TECHNOLOGIES on September 26, 2024 and sell it today you would earn a total of  1,027  from holding SOFI TECHNOLOGIES or generate 231.31% return on investment over 90 days.

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

THAI BEVERAGE  vs.  SOFI TECHNOLOGIES

THAI BEVERAGE

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in THAI BEVERAGE are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. In spite of rather fragile basic indicators, THAI BEVERAGE may actually be approaching a critical reversion point that can send shares even higher in January 2025.

SOFI TECHNOLOGIES

Risk-Adjusted Performance

26 of 100

Strong

Compared to the overall equity markets, risk-adjusted returns on investments in SOFI TECHNOLOGIES are ranked lower than 26 (%) of all global equities and portfolios over the last 90 days. Despite nearly uncertain basic indicators, SOFI TECHNOLOGIES reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with THAI BEVERAGE and SOFI TECHNOLOGIES

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

The idea behind THAI BEVERAGE and SOFI TECHNOLOGIES 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 Portfolio Anywhere module to track or share privately all of your investments from the convenience of any device.