Correlation Between Thanachart Capital and Thaire Life

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

By analyzing existing cross correlation between Thanachart Capital Public and Thaire Life Assurance, you can compare the effects of market volatilities on Thanachart Capital and Thaire Life 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 Thanachart Capital with a short position of Thaire Life. Check out your portfolio center. Please also check ongoing floating volatility patterns of Thanachart Capital and Thaire Life.

Diversification Opportunities for Thanachart Capital and Thaire Life

0.32

Correlation Coefficient

Thanachart Capital  Thaire Life

Weak diversification

The 3 months correlation between Thanachart and Thaire is 0.32. Overlapping area represents the amount of risk that can be diversified away by holding Thanachart Capital Public and Thaire Life Assurance in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Thaire Life Assurance and Thanachart Capital 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 Thanachart Capital Public are associated (or correlated) with Thaire Life. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Thaire Life Assurance has no effect on the direction of Thanachart Capital i.e., Thanachart Capital and Thaire Life go up and down completely randomly.

Pair Corralation between Thanachart Capital and Thaire Life

Assuming the 90 days trading horizon Thanachart Capital is expected to generate 522.86 times less return on investment than Thaire Life. But when comparing it to its historical volatility, Thanachart Capital Public is 116.64 times less risky than Thaire Life. It trades about 0.02 of its potential returns per unit of risk. Thaire Life Assurance is currently generating about 0.11 of returns per unit of risk over similar time horizon. If you would invest  170.00  in Thaire Life Assurance on September 2, 2024 and sell it today you would lose (3.00) from holding Thaire Life Assurance or give up 1.76% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	100.0%
Values	Daily Returns

Thanachart Capital Public  vs.  Thaire Life Assurance

Thanachart Capital Public

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Thanachart Capital Public are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. Despite quite persistent forward-looking signals, Thanachart Capital is not utilizing all of its potentials. The current stock price mess, may contribute to short-term losses for the institutional investors.

Thaire Life Assurance

Risk-Adjusted Performance

8 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Thaire Life Assurance are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. Despite somewhat conflicting fundamental drivers, Thaire Life sustained solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Thanachart Capital and Thaire Life

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

The idea behind Thanachart Capital Public and Thaire Life Assurance 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.

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 Investing Opportunities module to build portfolios using our predefined set of ideas and optimize them against your investing preferences.