Correlation Between THAI BEVERAGE and SCOTT TECHNOLOGY

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

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

Diversification Opportunities for THAI BEVERAGE and SCOTT TECHNOLOGY

0.6

Correlation Coefficient

THAI BEVERAGE  SCOTT TECHNOLOGY

Poor diversification

The 3 months correlation between THAI and SCOTT is 0.6. Overlapping area represents the amount of risk that can be diversified away by holding THAI BEVERAGE and SCOTT TECHNOLOGY in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SCOTT TECHNOLOGY 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 SCOTT TECHNOLOGY. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of SCOTT TECHNOLOGY has no effect on the direction of THAI BEVERAGE i.e., THAI BEVERAGE and SCOTT TECHNOLOGY go up and down completely randomly.

Pair Corralation between THAI BEVERAGE and SCOTT TECHNOLOGY

Assuming the 90 days trading horizon THAI BEVERAGE is expected to generate 1.07 times more return on investment than SCOTT TECHNOLOGY. However, THAI BEVERAGE is 1.07 times more volatile than SCOTT TECHNOLOGY. It trades about 0.03 of its potential returns per unit of risk. SCOTT TECHNOLOGY is currently generating about 0.0 per unit of risk. If you would invest  25.00  in THAI BEVERAGE on November 20, 2024 and sell it today you would earn a total of  10.00  from holding THAI BEVERAGE or generate 40.0% return on investment over 90 days.

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

THAI BEVERAGE  vs.  SCOTT TECHNOLOGY

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

SCOTT TECHNOLOGY

Risk-Adjusted Performance

Weak

Over the last 90 days SCOTT TECHNOLOGY has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of rather sound technical indicators, SCOTT TECHNOLOGY is not utilizing all of its potentials. The current stock price tumult, may contribute to shorter-term losses for the shareholders.

Pair Trading with THAI BEVERAGE and SCOTT TECHNOLOGY

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

The idea behind THAI BEVERAGE and SCOTT TECHNOLOGY 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 My Watchlist Analysis module to analyze my current watchlist and to refresh optimization strategy. Macroaxis watchlist is based on self-learning algorithm to remember stocks you like.