Correlation Between THAI BEVERAGE and North American

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Can any of the company-specific risk be diversified away by investing in both THAI BEVERAGE and North American 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 North American into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between THAI BEVERAGE and North American Construction, you can compare the effects of market volatilities on THAI BEVERAGE and North American 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 North American. Check out your portfolio center. Please also check ongoing floating volatility patterns of THAI BEVERAGE and North American.

Diversification Opportunities for THAI BEVERAGE and North American

THAINorthDiversified AwayTHAINorthDiversified Away100%
0.29
  Correlation Coefficient

Modest diversification

The 3 months correlation between THAI and North is 0.29. Overlapping area represents the amount of risk that can be diversified away by holding THAI BEVERAGE and North American Construction in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on North American Const 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 North American. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of North American Const has no effect on the direction of THAI BEVERAGE i.e., THAI BEVERAGE and North American go up and down completely randomly.

Pair Corralation between THAI BEVERAGE and North American

Assuming the 90 days trading horizon THAI BEVERAGE is expected to generate 0.83 times more return on investment than North American. However, THAI BEVERAGE is 1.2 times less risky than North American. It trades about 0.01 of its potential returns per unit of risk. North American Construction is currently generating about -0.01 per unit of risk. If you would invest  35.00  in THAI BEVERAGE on November 19, 2024 and sell it today you would earn a total of  0.00  from holding THAI BEVERAGE or generate 0.0% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthVery Weak
Accuracy100.0%
ValuesDaily Returns

THAI BEVERAGE  vs.  North American Construction

 Performance 
JavaScript chart by amCharts 3.21.15Dec2025Feb -50510
JavaScript chart by amCharts 3.21.15T6W N5Z
       Timeline  
THAI BEVERAGE 

Risk-Adjusted Performance

Very Weak

 
Weak
 
Strong
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.
JavaScript chart by amCharts 3.21.15DecJanFebJanFeb0.350.360.370.380.390.4
North American Const 

Risk-Adjusted Performance

Very Weak

 
Weak
 
Strong
Over the last 90 days North American Construction has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable basic indicators, North American is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.
JavaScript chart by amCharts 3.21.15DecJanFebJanFeb1818.51919.52020.521

THAI BEVERAGE and North American Volatility Contrast

   Predicted Return Density   
JavaScript chart by amCharts 3.21.15-3.36-2.51-1.67-0.83-0.0140.811.642.483.314.14 0.0550.0600.0650.0700.0750.0800.0850.090
JavaScript chart by amCharts 3.21.15T6W N5Z
       Returns  

Pair Trading with THAI BEVERAGE and North American

The main advantage of trading using opposite THAI BEVERAGE and North American positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if THAI BEVERAGE position performs unexpectedly, North American 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 North American will offset losses from the drop in North American's long position.
The idea behind THAI BEVERAGE and North American Construction 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 Competition Analyzer module to analyze and compare many basic indicators for a group of related or unrelated entities.

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