Correlation Between Thai Beverage and Retail Estates

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

Diversification Opportunities for Thai Beverage and Retail Estates

-0.37

Correlation Coefficient

Thai Beverage  Retail Estates

Very good diversification

The 3 months correlation between Thai and Retail is -0.37. Overlapping area represents the amount of risk that can be diversified away by holding Thai Beverage Public and Retail Estates NV in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Retail Estates NV 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 Retail Estates. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Retail Estates NV has no effect on the direction of Thai Beverage i.e., Thai Beverage and Retail Estates go up and down completely randomly.

Pair Corralation between Thai Beverage and Retail Estates

Assuming the 90 days horizon Thai Beverage Public is expected to generate 4.41 times more return on investment than Retail Estates. However, Thai Beverage is 4.41 times more volatile than Retail Estates NV. It trades about 0.05 of its potential returns per unit of risk. Retail Estates NV is currently generating about 0.03 per unit of risk. If you would invest  16.00  in Thai Beverage Public on October 10, 2024 and sell it today you would earn a total of  24.00  from holding Thai Beverage Public or generate 150.0% return on investment over 90 days.

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

Thai Beverage Public  vs.  Retail Estates NV

Thai Beverage Public

Risk-Adjusted Performance

6 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Thai Beverage Public are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. Despite nearly uncertain basic indicators, Thai Beverage reported solid returns over the last few months and may actually be approaching a breakup point.

Retail Estates NV

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Retail Estates NV 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.

Pair Trading with Thai Beverage and Retail Estates

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

The idea behind Thai Beverage Public and Retail Estates NV 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 Holdings module to check your current holdings and cash postion to detemine if your portfolio needs rebalancing.