Correlation Between Thai Beverage and Compagnie Plastic

Can any of the company-specific risk be diversified away by investing in both Thai Beverage and Compagnie Plastic 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 Compagnie Plastic 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 Compagnie Plastic Omnium, you can compare the effects of market volatilities on Thai Beverage and Compagnie Plastic 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 Compagnie Plastic. Check out your portfolio center. Please also check ongoing floating volatility patterns of Thai Beverage and Compagnie Plastic.

Diversification Opportunities for Thai Beverage and Compagnie Plastic

-0.43

Correlation Coefficient

Thai Beverage  Compagnie Plastic

Very good diversification

The 3 months correlation between Thai and Compagnie is -0.43. Overlapping area represents the amount of risk that can be diversified away by holding Thai Beverage Public and Compagnie Plastic Omnium in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Compagnie Plastic Omnium 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 Compagnie Plastic. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Compagnie Plastic Omnium has no effect on the direction of Thai Beverage i.e., Thai Beverage and Compagnie Plastic go up and down completely randomly.

Pair Corralation between Thai Beverage and Compagnie Plastic

Assuming the 90 days horizon Thai Beverage Public is expected to under-perform the Compagnie Plastic. In addition to that, Thai Beverage is 1.03 times more volatile than Compagnie Plastic Omnium. It trades about -0.03 of its total potential returns per unit of risk. Compagnie Plastic Omnium is currently generating about 0.0 per unit of volatility. If you would invest  1,054  in Compagnie Plastic Omnium on December 4, 2024 and sell it today you would lose (5.00) from holding Compagnie Plastic Omnium or give up 0.47% of portfolio value over 90 days.

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

Thai Beverage Public  vs.  Compagnie Plastic Omnium

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 latest fragile 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.

Compagnie Plastic Omnium

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Compagnie Plastic Omnium are ranked lower than 13 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, Compagnie Plastic reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Thai Beverage and Compagnie Plastic

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

The idea behind Thai Beverage Public and Compagnie Plastic Omnium 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 Money Managers module to screen money managers from public funds and ETFs managed around the world.