Correlation Between THAI BEVERAGE and Grand Canyon

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

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

Diversification Opportunities for THAI BEVERAGE and Grand Canyon

-0.23

Correlation Coefficient

THAI BEVERAGE  Grand Canyon

Very good diversification

The 3 months correlation between THAI and Grand is -0.23. Overlapping area represents the amount of risk that can be diversified away by holding THAI BEVERAGE and Grand Canyon Education in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Grand Canyon Education 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 Grand Canyon. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Grand Canyon Education has no effect on the direction of THAI BEVERAGE i.e., THAI BEVERAGE and Grand Canyon go up and down completely randomly.

Pair Corralation between THAI BEVERAGE and Grand Canyon

Assuming the 90 days trading horizon THAI BEVERAGE is expected to under-perform the Grand Canyon. In addition to that, THAI BEVERAGE is 1.35 times more volatile than Grand Canyon Education. It trades about -0.03 of its total potential returns per unit of risk. Grand Canyon Education is currently generating about -0.01 per unit of volatility. If you would invest  15,500  in Grand Canyon Education on December 20, 2024 and sell it today you would lose (200.00) from holding Grand Canyon Education or give up 1.29% of portfolio value over 90 days.

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

THAI BEVERAGE  vs.  Grand Canyon Education

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 rather sound basic indicators, THAI BEVERAGE is not utilizing all of its potentials. The newest stock price tumult, may contribute to shorter-term losses for the shareholders.

Grand Canyon Education

Risk-Adjusted Performance

Very Weak

Over the last 90 days Grand Canyon Education has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable basic indicators, Grand Canyon is not utilizing all of its potentials. The current stock price uproar, may contribute to short-horizon losses for the private investors.

Pair Trading with THAI BEVERAGE and Grand Canyon

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

The idea behind THAI BEVERAGE and Grand Canyon Education 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.

Check out your portfolio center.

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 Money Managers module to screen money managers from public funds and ETFs managed around the world.