Correlation Between Thai Beverage and State Bank

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

Diversification Opportunities for Thai Beverage and State Bank

0.02

Correlation Coefficient

Thai Beverage  State Bank

Significant diversification

The 3 months correlation between Thai and State is 0.02. Overlapping area represents the amount of risk that can be diversified away by holding Thai Beverage Public and State Bank of in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on State Bank 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 State Bank. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of State Bank has no effect on the direction of Thai Beverage i.e., Thai Beverage and State Bank go up and down completely randomly.

Pair Corralation between Thai Beverage and State Bank

Assuming the 90 days horizon Thai Beverage Public is expected to generate 1.82 times more return on investment than State Bank. However, Thai Beverage is 1.82 times more volatile than State Bank of. It trades about 0.05 of its potential returns per unit of risk. State Bank of is currently generating about 0.06 per unit of risk. If you would invest  36.00  in Thai Beverage Public on September 5, 2024 and sell it today you would earn a total of  3.00  from holding Thai Beverage Public or generate 8.33% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	98.46%
Values	Daily Returns

Thai Beverage Public  vs.  State Bank of

Thai Beverage Public

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Thai Beverage Public are ranked lower than 4 (%) 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 January 2025.

State Bank

Risk-Adjusted Performance

4 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in State Bank of are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, State Bank may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with Thai Beverage and State Bank

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

The idea behind Thai Beverage Public and State Bank of 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 Transaction History module to view history of all your transactions and understand their impact on performance.