Correlation Between Thai Beverage and Diageo Plc
Can any of the company-specific risk be diversified away by investing in both Thai Beverage and Diageo Plc 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 Diageo Plc 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 Diageo plc, you can compare the effects of market volatilities on Thai Beverage and Diageo Plc 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 Diageo Plc. Check out your portfolio center. Please also check ongoing floating volatility patterns of Thai Beverage and Diageo Plc.
Diversification Opportunities for Thai Beverage and Diageo Plc
-0.09 | Correlation Coefficient |
Good diversification
The 3 months correlation between Thai and Diageo is -0.09. Overlapping area represents the amount of risk that can be diversified away by holding Thai Beverage Public and Diageo plc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Diageo plc 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 Diageo Plc. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Diageo plc has no effect on the direction of Thai Beverage i.e., Thai Beverage and Diageo Plc go up and down completely randomly.
Pair Corralation between Thai Beverage and Diageo Plc
Assuming the 90 days horizon Thai Beverage Public is expected to generate 2.64 times more return on investment than Diageo Plc. However, Thai Beverage is 2.64 times more volatile than Diageo plc. It trades about 0.02 of its potential returns per unit of risk. Diageo plc is currently generating about -0.12 per unit of risk. If you would invest 40.00 in Thai Beverage Public on December 28, 2024 and sell it today you would lose (1.00) from holding Thai Beverage Public or give up 2.5% of portfolio value over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Against |
Strength | Insignificant |
Accuracy | 98.33% |
Values | Daily Returns |
Thai Beverage Public vs. Diageo plc
Performance |
Timeline |
Thai Beverage Public |
Risk-Adjusted Performance
Weak
Weak | Strong |
Diageo plc |
Thai Beverage and Diageo Plc Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Thai Beverage and Diageo Plc
The main advantage of trading using opposite Thai Beverage and Diageo Plc positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Thai Beverage position performs unexpectedly, Diageo Plc 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 Diageo Plc will offset losses from the drop in Diageo Plc's long position.Thai Beverage vs. Brown Forman | Thai Beverage vs. Pernod Ricard SA | Thai Beverage vs. Willamette Valley Vineyards | Thai Beverage vs. MGP Ingredients |
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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 Portfolio Dashboard module to portfolio dashboard that provides centralized access to all your investments.
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