Correlation Between THAI BEVERAGE and Prosiebensat

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

By analyzing existing cross correlation between THAI BEVERAGE and Prosiebensat 1 Media, you can compare the effects of market volatilities on THAI BEVERAGE and Prosiebensat 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 Prosiebensat. Check out your portfolio center. Please also check ongoing floating volatility patterns of THAI BEVERAGE and Prosiebensat.

Diversification Opportunities for THAI BEVERAGE and Prosiebensat

-0.66

Correlation Coefficient

THAI BEVERAGE  Prosiebensat

Excellent diversification

The 3 months correlation between THAI and Prosiebensat is -0.66. Overlapping area represents the amount of risk that can be diversified away by holding THAI BEVERAGE and Prosiebensat 1 Media in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Prosiebensat 1 Media 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 Prosiebensat. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Prosiebensat 1 Media has no effect on the direction of THAI BEVERAGE i.e., THAI BEVERAGE and Prosiebensat go up and down completely randomly.

Pair Corralation between THAI BEVERAGE and Prosiebensat

Assuming the 90 days trading horizon THAI BEVERAGE is expected to under-perform the Prosiebensat. But the stock apears to be less risky and, when comparing its historical volatility, THAI BEVERAGE is 1.32 times less risky than Prosiebensat. The stock trades about -0.06 of its potential returns per unit of risk. The Prosiebensat 1 Media is currently generating about 0.16 of returns per unit of risk over similar time horizon. If you would invest  504.00  in Prosiebensat 1 Media on December 25, 2024 and sell it today you would earn a total of  140.00  from holding Prosiebensat 1 Media or generate 27.78% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Weak
Accuracy	98.36%
Values	Daily Returns

THAI BEVERAGE  vs.  Prosiebensat 1 Media

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.

Prosiebensat 1 Media

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Prosiebensat 1 Media are ranked lower than 12 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively fragile primary indicators, Prosiebensat unveiled solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with THAI BEVERAGE and Prosiebensat

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

The idea behind THAI BEVERAGE and Prosiebensat 1 Media 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 Portfolio Analyzer module to portfolio analysis module that provides access to portfolio diagnostics and optimization engine.