Correlation Between Thai Beverage and BRP

Can any of the company-specific risk be diversified away by investing in both Thai Beverage and BRP 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 BRP into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Thai Beverage PCL and BRP Inc, you can compare the effects of market volatilities on Thai Beverage and BRP 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 BRP. Check out your portfolio center. Please also check ongoing floating volatility patterns of Thai Beverage and BRP.

Diversification Opportunities for Thai Beverage and BRP

0.0

Correlation Coefficient

Thai Beverage  BRP

Pay attention - limited upside

The 3 months correlation between Thai and BRP is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding Thai Beverage PCL and BRP Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on BRP Inc 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 PCL are associated (or correlated) with BRP. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of BRP Inc has no effect on the direction of Thai Beverage i.e., Thai Beverage and BRP go up and down completely randomly.

Pair Corralation between Thai Beverage and BRP

Assuming the 90 days horizon Thai Beverage PCL is expected to under-perform the BRP. But the pink sheet apears to be less risky and, when comparing its historical volatility, Thai Beverage PCL is 1.14 times less risky than BRP. The pink sheet trades about -0.06 of its potential returns per unit of risk. The BRP Inc is currently generating about -0.02 of returns per unit of risk over similar time horizon. If you would invest  7,406  in BRP Inc on September 18, 2024 and sell it today you would lose (2,259) from holding BRP Inc or give up 30.5% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Flat
Strength	Insignificant
Accuracy	60.08%
Values	Daily Returns

Thai Beverage PCL  vs.  BRP Inc

Thai Beverage PCL

Risk-Adjusted Performance

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Very Weak

Over the last 90 days Thai Beverage PCL has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly strong basic indicators, Thai Beverage is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

BRP Inc

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days BRP Inc has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of weak performance in the last few months, the Stock's basic indicators remain very healthy which may send shares a bit higher in January 2025. The recent disarray may also be a sign of long period up-swing for the firm investors.

Pair Trading with Thai Beverage and BRP

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

The idea behind Thai Beverage PCL and BRP Inc 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 My Watchlist Analysis module to analyze my current watchlist and to refresh optimization strategy. Macroaxis watchlist is based on self-learning algorithm to remember stocks you like.