Correlation Between THAI BEVERAGE and AGF Management

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

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

Diversification Opportunities for THAI BEVERAGE and AGF Management

0.31

Correlation Coefficient

THAI BEVERAGE  AGF Management

Weak diversification

The 3 months correlation between THAI and AGF is 0.31. Overlapping area represents the amount of risk that can be diversified away by holding THAI BEVERAGE and AGF Management Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on AGF Management 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 AGF Management. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of AGF Management has no effect on the direction of THAI BEVERAGE i.e., THAI BEVERAGE and AGF Management go up and down completely randomly.

Pair Corralation between THAI BEVERAGE and AGF Management

Assuming the 90 days trading horizon THAI BEVERAGE is expected to generate 2.46 times more return on investment than AGF Management. However, THAI BEVERAGE is 2.46 times more volatile than AGF Management Limited. It trades about 0.06 of its potential returns per unit of risk. AGF Management Limited is currently generating about 0.06 per unit of risk. If you would invest  15.00  in THAI BEVERAGE on October 11, 2024 and sell it today you would earn a total of  22.00  from holding THAI BEVERAGE or generate 146.67% 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.  AGF Management Limited

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 uncertain basic indicators, THAI BEVERAGE may actually be approaching a critical reversion point that can send shares even higher in February 2025.

AGF Management

Risk-Adjusted Performance

2 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in AGF Management Limited are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. Despite nearly stable basic indicators, AGF Management 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 AGF Management

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

The idea behind THAI BEVERAGE and AGF Management 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 Equity Valuation module to check real value of public entities based on technical and fundamental data.