Correlation Between Thai Beverage and INSURANCE AUST

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

Diversification Opportunities for Thai Beverage and INSURANCE AUST

0.52

Correlation Coefficient

Thai Beverage  INSURANCE AUST

Very weak diversification

The 3 months correlation between Thai and INSURANCE is 0.52. Overlapping area represents the amount of risk that can be diversified away by holding Thai Beverage Public and INSURANCE AUST GRP in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on INSURANCE AUST GRP 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 INSURANCE AUST. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of INSURANCE AUST GRP has no effect on the direction of Thai Beverage i.e., Thai Beverage and INSURANCE AUST go up and down completely randomly.

Pair Corralation between Thai Beverage and INSURANCE AUST

Assuming the 90 days horizon Thai Beverage Public is expected to generate 1.36 times more return on investment than INSURANCE AUST. However, Thai Beverage is 1.36 times more volatile than INSURANCE AUST GRP. It trades about -0.02 of its potential returns per unit of risk. INSURANCE AUST GRP is currently generating about -0.07 per unit of risk. If you would invest  37.00  in Thai Beverage Public on December 21, 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	Weak
Accuracy	100.0%
Values	Daily Returns

Thai Beverage Public  vs.  INSURANCE AUST GRP

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.

INSURANCE AUST GRP

Risk-Adjusted Performance

Very Weak

Over the last 90 days INSURANCE AUST GRP has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest weak performance, the Stock's primary indicators remain sound and the latest tumult on Wall Street may also be a sign of longer-term gains for the firm shareholders.

Pair Trading with Thai Beverage and INSURANCE AUST

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

The idea behind Thai Beverage Public and INSURANCE AUST GRP 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 Pair Correlation module to compare performance and examine fundamental relationship between any two equity instruments.