Correlation Between THAI BEVERAGE and Holmen AB

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

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

Diversification Opportunities for THAI BEVERAGE and Holmen AB

-0.79

Correlation Coefficient

THAI BEVERAGE  Holmen AB

Pay attention - limited upside

The 3 months correlation between THAI and Holmen is -0.79. Overlapping area represents the amount of risk that can be diversified away by holding THAI BEVERAGE and Holmen AB in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Holmen AB 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 Holmen AB. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Holmen AB has no effect on the direction of THAI BEVERAGE i.e., THAI BEVERAGE and Holmen AB go up and down completely randomly.

Pair Corralation between THAI BEVERAGE and Holmen AB

Assuming the 90 days trading horizon THAI BEVERAGE is expected to under-perform the Holmen AB. In addition to that, THAI BEVERAGE is 1.65 times more volatile than Holmen AB. It trades about -0.04 of its total potential returns per unit of risk. Holmen AB is currently generating about 0.15 per unit of volatility. If you would invest  3,480  in Holmen AB on December 21, 2024 and sell it today you would earn a total of  380.00  from holding Holmen AB or generate 10.92% return on investment over 90 days.

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

THAI BEVERAGE  vs.  Holmen AB

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 current stock price tumult, may contribute to shorter-term losses for the shareholders.

Holmen AB

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Holmen AB are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. Despite nearly weak basic indicators, Holmen AB may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Pair Trading with THAI BEVERAGE and Holmen AB

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

The idea behind THAI BEVERAGE and Holmen AB 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 ETFs module to find actively traded Exchange Traded Funds (ETF) from around the world.