Correlation Between THAI BEVERAGE and BANK MANDIRI

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

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

Diversification Opportunities for THAI BEVERAGE and BANK MANDIRI

-0.56

Correlation Coefficient

THAI BEVERAGE  BANK MANDIRI

Excellent diversification

The 3 months correlation between THAI and BANK is -0.56. Overlapping area represents the amount of risk that can be diversified away by holding THAI BEVERAGE and BANK MANDIRI in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on BANK MANDIRI 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 BANK MANDIRI. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of BANK MANDIRI has no effect on the direction of THAI BEVERAGE i.e., THAI BEVERAGE and BANK MANDIRI go up and down completely randomly.

Pair Corralation between THAI BEVERAGE and BANK MANDIRI

Assuming the 90 days trading horizon THAI BEVERAGE is expected to under-perform the BANK MANDIRI. In addition to that, THAI BEVERAGE is 1.08 times more volatile than BANK MANDIRI. It trades about -0.08 of its total potential returns per unit of risk. BANK MANDIRI is currently generating about 0.33 per unit of volatility. If you would invest  32.00  in BANK MANDIRI on October 24, 2024 and sell it today you would earn a total of  3.00  from holding BANK MANDIRI or generate 9.38% return on investment over 90 days.

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

THAI BEVERAGE  vs.  BANK MANDIRI

THAI BEVERAGE

Risk-Adjusted Performance

0 of 100

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.

BANK MANDIRI

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days BANK MANDIRI has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of unfluctuating performance in the last few months, the Stock's basic indicators remain comparatively stable which may send shares a bit higher in February 2025. The newest uproar may also be a sign of mid-term up-swing for the firm private investors.

Pair Trading with THAI BEVERAGE and BANK MANDIRI

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

The idea behind THAI BEVERAGE and BANK MANDIRI 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 Stocks Directory module to find actively traded stocks across global markets.