Correlation Between Thai Beverage and Walt Disney
Can any of the company-specific risk be diversified away by investing in both Thai Beverage and Walt Disney 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 Walt Disney 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 The Walt Disney, you can compare the effects of market volatilities on Thai Beverage and Walt Disney 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 Walt Disney. Check out your portfolio center. Please also check ongoing floating volatility patterns of Thai Beverage and Walt Disney.
Diversification Opportunities for Thai Beverage and Walt Disney
0.55 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Thai and Walt is 0.55. Overlapping area represents the amount of risk that can be diversified away by holding Thai Beverage Public and The Walt Disney in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Walt Disney 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 Walt Disney. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Walt Disney has no effect on the direction of Thai Beverage i.e., Thai Beverage and Walt Disney go up and down completely randomly.
Pair Corralation between Thai Beverage and Walt Disney
Assuming the 90 days horizon Thai Beverage is expected to generate 2.12 times less return on investment than Walt Disney. In addition to that, Thai Beverage is 2.09 times more volatile than The Walt Disney. It trades about 0.04 of its total potential returns per unit of risk. The Walt Disney is currently generating about 0.2 per unit of volatility. If you would invest 8,804 in The Walt Disney on October 26, 2024 and sell it today you would earn a total of 1,768 from holding The Walt Disney or generate 20.08% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Weak |
Accuracy | 98.33% |
Values | Daily Returns |
Thai Beverage Public vs. The Walt Disney
Performance |
Timeline |
Thai Beverage Public |
Walt Disney |
Thai Beverage and Walt Disney Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Thai Beverage and Walt Disney
The main advantage of trading using opposite Thai Beverage and Walt Disney positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Thai Beverage position performs unexpectedly, Walt Disney 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 Walt Disney will offset losses from the drop in Walt Disney's long position.Thai Beverage vs. Diageo plc | ||
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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 Performance Analysis module to check effects of mean-variance optimization against your current asset allocation.
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