Correlation Between Thai Beverage and Liontown Resources

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

Diversification Opportunities for Thai Beverage and Liontown Resources

-0.46

Correlation Coefficient

Thai Beverage  Liontown Resources

Very good diversification

The 3 months correlation between Thai and Liontown is -0.46. Overlapping area represents the amount of risk that can be diversified away by holding Thai Beverage Public and Liontown Resources Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Liontown Resources 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 Liontown Resources. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Liontown Resources has no effect on the direction of Thai Beverage i.e., Thai Beverage and Liontown Resources go up and down completely randomly.

Pair Corralation between Thai Beverage and Liontown Resources

Assuming the 90 days horizon Thai Beverage Public is expected to generate 0.66 times more return on investment than Liontown Resources. However, Thai Beverage Public is 1.51 times less risky than Liontown Resources. It trades about 0.14 of its potential returns per unit of risk. Liontown Resources Limited is currently generating about -0.2 per unit of risk. If you would invest  35.00  in Thai Beverage Public on October 7, 2024 and sell it today you would earn a total of  5.00  from holding Thai Beverage Public or generate 14.29% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	97.44%
Values	Daily Returns

Thai Beverage Public  vs.  Liontown Resources Limited

Thai Beverage Public

Risk-Adjusted Performance

3 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Thai Beverage Public are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, Thai Beverage may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Liontown Resources

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Liontown Resources Limited has generated negative risk-adjusted returns adding no value to investors with long positions. Despite fragile performance in the last few months, the Stock's basic indicators remain nearly stable which may send shares a bit higher in February 2025. The current disturbance may also be a sign of long-run up-swing for the company stockholders.

Pair Trading with Thai Beverage and Liontown Resources

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

The idea behind Thai Beverage Public and Liontown Resources Limited 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 Suggestion module to get suggestions outside of your existing asset allocation including your own model portfolios.