Correlation Between THAI BEVERAGE and Aptiv PLC

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

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

Diversification Opportunities for THAI BEVERAGE and Aptiv PLC

-0.15

Correlation Coefficient

THAI BEVERAGE  Aptiv PLC

Good diversification

The 3 months correlation between THAI and Aptiv is -0.15. Overlapping area represents the amount of risk that can be diversified away by holding THAI BEVERAGE and Aptiv PLC in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Aptiv PLC 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 Aptiv PLC. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Aptiv PLC has no effect on the direction of THAI BEVERAGE i.e., THAI BEVERAGE and Aptiv PLC go up and down completely randomly.

Pair Corralation between THAI BEVERAGE and Aptiv PLC

Assuming the 90 days trading horizon THAI BEVERAGE is expected to generate 1.77 times less return on investment than Aptiv PLC. In addition to that, THAI BEVERAGE is 1.46 times more volatile than Aptiv PLC. It trades about 0.07 of its total potential returns per unit of risk. Aptiv PLC is currently generating about 0.17 per unit of volatility. If you would invest  5,206  in Aptiv PLC on September 24, 2024 and sell it today you would earn a total of  281.00  from holding Aptiv PLC or generate 5.4% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	95.45%
Values	Daily Returns

THAI BEVERAGE  vs.  Aptiv PLC

THAI BEVERAGE

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in THAI BEVERAGE are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. 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.

Aptiv PLC

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Aptiv PLC has generated negative risk-adjusted returns adding no value to investors with long positions. Despite unsteady performance in the last few months, the Stock's basic indicators remain nearly stable which may send shares a bit higher in January 2025. The current disturbance may also be a sign of long-run up-swing for the company stockholders.

Pair Trading with THAI BEVERAGE and Aptiv PLC

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

The idea behind THAI BEVERAGE and Aptiv PLC 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 Theme Ratings module to determine theme ratings based on digital equity recommendations. Macroaxis theme ratings are based on combination of fundamental analysis and risk-adjusted market performance.