Correlation Between Thai Beverage and INGERSOLL

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

Diversification Opportunities for Thai Beverage and INGERSOLL

0.0

Correlation Coefficient

Thai Beverage  INGERSOLL

Pay attention - limited upside

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

Pair Corralation between Thai Beverage and INGERSOLL

Assuming the 90 days horizon Thai Beverage PCL is expected to under-perform the INGERSOLL. But the pink sheet apears to be less risky and, when comparing its historical volatility, Thai Beverage PCL is 44.48 times less risky than INGERSOLL. The pink sheet trades about -0.06 of its potential returns per unit of risk. The INGERSOLL RAND GLOBAL HLDG is currently generating about 0.07 of returns per unit of risk over similar time horizon. If you would invest  10,052  in INGERSOLL RAND GLOBAL HLDG on October 23, 2024 and sell it today you would earn a total of  91.00  from holding INGERSOLL RAND GLOBAL HLDG or generate 0.91% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Flat
Strength	Insignificant
Accuracy	96.41%
Values	Daily Returns

Thai Beverage PCL  vs.  INGERSOLL RAND GLOBAL HLDG

Thai Beverage PCL

Risk-Adjusted Performance

0 of 100

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.

INGERSOLL RAND GLOBAL

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days INGERSOLL RAND GLOBAL HLDG has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong basic indicators, INGERSOLL is not utilizing all of its potentials. The latest stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Thai Beverage and INGERSOLL

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

The idea behind Thai Beverage PCL and INGERSOLL RAND GLOBAL HLDG 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.