Correlation Between THAI BEVERAGE and Goldman Sachs

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

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

Diversification Opportunities for THAI BEVERAGE and Goldman Sachs

0.24

Correlation Coefficient

THAI BEVERAGE  Goldman Sachs

Modest diversification

The 3 months correlation between THAI and Goldman is 0.24. Overlapping area represents the amount of risk that can be diversified away by holding THAI BEVERAGE and The Goldman Sachs in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Goldman Sachs 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 Goldman Sachs. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Goldman Sachs has no effect on the direction of THAI BEVERAGE i.e., THAI BEVERAGE and Goldman Sachs go up and down completely randomly.

Pair Corralation between THAI BEVERAGE and Goldman Sachs

Assuming the 90 days trading horizon THAI BEVERAGE is expected to under-perform the Goldman Sachs. But the stock apears to be less risky and, when comparing its historical volatility, THAI BEVERAGE is 1.07 times less risky than Goldman Sachs. The stock trades about -0.05 of its potential returns per unit of risk. The The Goldman Sachs is currently generating about -0.01 of returns per unit of risk over similar time horizon. If you would invest  54,763  in The Goldman Sachs on December 29, 2024 and sell it today you would lose (1,533) from holding The Goldman Sachs or give up 2.8% of portfolio value over 90 days.

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

THAI BEVERAGE  vs.  The Goldman Sachs

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 fragile 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.

Goldman Sachs

Risk-Adjusted Performance

Very Weak

Over the last 90 days The Goldman Sachs has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable basic indicators, Goldman Sachs 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 Goldman Sachs

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

The idea behind THAI BEVERAGE and The Goldman Sachs 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 Bonds Directory module to find actively traded corporate debentures issued by US companies.