Correlation Between Thai Beverage and NMI Holdings

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

By analyzing existing cross correlation between Thai Beverage Public and NMI Holdings, you can compare the effects of market volatilities on Thai Beverage and NMI Holdings 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 NMI Holdings. Check out your portfolio center. Please also check ongoing floating volatility patterns of Thai Beverage and NMI Holdings.

Diversification Opportunities for Thai Beverage and NMI Holdings

0.28

Correlation Coefficient

Thai Beverage  NMI Holdings

Modest diversification

The 3 months correlation between Thai and NMI is 0.28. Overlapping area represents the amount of risk that can be diversified away by holding Thai Beverage Public and NMI Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on NMI Holdings 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 Public are associated (or correlated) with NMI Holdings. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of NMI Holdings has no effect on the direction of Thai Beverage i.e., Thai Beverage and NMI Holdings go up and down completely randomly.

Pair Corralation between Thai Beverage and NMI Holdings

Assuming the 90 days horizon Thai Beverage Public is expected to generate 1.91 times more return on investment than NMI Holdings. However, Thai Beverage is 1.91 times more volatile than NMI Holdings. It trades about -0.01 of its potential returns per unit of risk. NMI Holdings is currently generating about -0.09 per unit of risk. If you would invest  37.00  in Thai Beverage Public on December 19, 2024 and sell it today you would lose (2.00) from holding Thai Beverage Public or give up 5.41% of portfolio value over 90 days.

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

Thai Beverage Public  vs.  NMI Holdings

Thai Beverage Public

Risk-Adjusted Performance

Very Weak

Over the last 90 days Thai Beverage Public has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable basic indicators, Thai Beverage is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

NMI Holdings

Risk-Adjusted Performance

Very Weak

Over the last 90 days NMI Holdings has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest uncertain performance, the Stock's basic indicators remain stable and the current disturbance on Wall Street may also be a sign of long-run gains for the company stockholders.

Pair Trading with Thai Beverage and NMI Holdings

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

The idea behind Thai Beverage Public and NMI Holdings 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.

Check out your portfolio center.

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 Dashboard module to portfolio dashboard that provides centralized access to all your investments.