Correlation Between THAI BEVERAGE and SHINHAN FINL

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

By analyzing existing cross correlation between THAI BEVERAGE and SHINHAN FINL ADR1, you can compare the effects of market volatilities on THAI BEVERAGE and SHINHAN FINL 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 SHINHAN FINL. Check out your portfolio center. Please also check ongoing floating volatility patterns of THAI BEVERAGE and SHINHAN FINL.

Diversification Opportunities for THAI BEVERAGE and SHINHAN FINL

-0.38

Correlation Coefficient

THAI BEVERAGE  SHINHAN FINL

Very good diversification

The 3 months correlation between THAI and SHINHAN is -0.38. Overlapping area represents the amount of risk that can be diversified away by holding THAI BEVERAGE and SHINHAN FINL ADR1 in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SHINHAN FINL ADR1 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 SHINHAN FINL. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of SHINHAN FINL ADR1 has no effect on the direction of THAI BEVERAGE i.e., THAI BEVERAGE and SHINHAN FINL go up and down completely randomly.

Pair Corralation between THAI BEVERAGE and SHINHAN FINL

Assuming the 90 days trading horizon THAI BEVERAGE is expected to generate 0.65 times more return on investment than SHINHAN FINL. However, THAI BEVERAGE is 1.54 times less risky than SHINHAN FINL. It trades about -0.23 of its potential returns per unit of risk. SHINHAN FINL ADR1 is currently generating about -0.34 per unit of risk. If you would invest  40.00  in THAI BEVERAGE on October 4, 2024 and sell it today you would lose (3.00) from holding THAI BEVERAGE or give up 7.5% 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.  SHINHAN FINL ADR1

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

SHINHAN FINL ADR1

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days SHINHAN FINL ADR1 has generated negative risk-adjusted returns adding no value to investors with long positions. Despite fragile performance in the last few months, the Stock's technical and fundamental indicators remain nearly stable which may send shares a bit higher in February 2025. The current disturbance may also be a sign of long-run up-swing for the company stockholders.

Pair Trading with THAI BEVERAGE and SHINHAN FINL

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

The idea behind THAI BEVERAGE and SHINHAN FINL ADR1 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 Analysis module to research over 250,000 global equities including funds, stocks and ETFs to find investment opportunities.