Correlation Between Thai Beverage and LION ONE

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

Diversification Opportunities for Thai Beverage and LION ONE

0.12

Correlation Coefficient

Thai Beverage  LION ONE

Average diversification

The 3 months correlation between Thai and LION is 0.12. Overlapping area represents the amount of risk that can be diversified away by holding Thai Beverage Public and LION ONE METALS in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on LION ONE METALS 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 LION ONE. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of LION ONE METALS has no effect on the direction of Thai Beverage i.e., Thai Beverage and LION ONE go up and down completely randomly.

Pair Corralation between Thai Beverage and LION ONE

Assuming the 90 days horizon Thai Beverage Public is expected to under-perform the LION ONE. But the stock apears to be less risky and, when comparing its historical volatility, Thai Beverage Public is 2.12 times less risky than LION ONE. The stock trades about -0.01 of its potential returns per unit of risk. The LION ONE METALS is currently generating about 0.13 of returns per unit of risk over similar time horizon. If you would invest  15.00  in LION ONE METALS on December 28, 2024 and sell it today you would earn a total of  7.00  from holding LION ONE METALS or generate 46.67% return on investment over 90 days.

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

Thai Beverage Public  vs.  LION ONE METALS

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.

LION ONE METALS

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in LION ONE METALS are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively fragile basic indicators, LION ONE unveiled solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Thai Beverage and LION ONE

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

The idea behind Thai Beverage Public and LION ONE METALS 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 Pattern Recognition module to use different Pattern Recognition models to time the market across multiple global exchanges.