Correlation Between THAI BEVERAGE and MTY Food

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

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

Diversification Opportunities for THAI BEVERAGE and MTY Food

0.51

Correlation Coefficient

THAI BEVERAGE  MTY Food

Very weak diversification

The 3 months correlation between THAI and MTY is 0.51. Overlapping area represents the amount of risk that can be diversified away by holding THAI BEVERAGE and MTY Food Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on MTY Food Group 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 MTY Food. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of MTY Food Group has no effect on the direction of THAI BEVERAGE i.e., THAI BEVERAGE and MTY Food go up and down completely randomly.

Pair Corralation between THAI BEVERAGE and MTY Food

Assuming the 90 days trading horizon THAI BEVERAGE is expected to generate 0.8 times more return on investment than MTY Food. However, THAI BEVERAGE is 1.25 times less risky than MTY Food. It trades about -0.06 of its potential returns per unit of risk. MTY Food Group is currently generating about -0.07 per unit of risk. If you would invest  37.00  in THAI BEVERAGE on December 19, 2024 and sell it today you would lose (3.00) from holding THAI BEVERAGE or give up 8.11% of portfolio value over 90 days.

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

THAI BEVERAGE  vs.  MTY Food Group

THAI BEVERAGE

Risk-Adjusted Performance

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 latest weak performance, the Stock's basic indicators remain sound and the latest tumult on Wall Street may also be a sign of longer-term gains for the firm shareholders.

MTY Food Group

Risk-Adjusted Performance

Very Weak

Over the last 90 days MTY Food Group has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest fragile performance, the Stock's basic indicators remain stable and the current disturbance on Wall Street may also be a sign of long-run gains for the company stockholders.

Pair Trading with THAI BEVERAGE and MTY Food

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

The idea behind THAI BEVERAGE and MTY Food Group 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 Headlines Timeline module to stay connected to all market stories and filter out noise. Drill down to analyze hype elasticity.