Correlation Between TCM Public and Thai Metal

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

By analyzing existing cross correlation between TCM Public and Thai Metal Drum, you can compare the effects of market volatilities on TCM Public and Thai Metal 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 TCM Public with a short position of Thai Metal. Check out your portfolio center. Please also check ongoing floating volatility patterns of TCM Public and Thai Metal.

Diversification Opportunities for TCM Public and Thai Metal

0.06

Correlation Coefficient

TCM Public  Thai Metal

Significant diversification

The 3 months correlation between TCM and Thai is 0.06. Overlapping area represents the amount of risk that can be diversified away by holding TCM Public and Thai Metal Drum in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Thai Metal Drum and TCM Public 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 TCM Public are associated (or correlated) with Thai Metal. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Thai Metal Drum has no effect on the direction of TCM Public i.e., TCM Public and Thai Metal go up and down completely randomly.

Pair Corralation between TCM Public and Thai Metal

Assuming the 90 days trading horizon TCM Public is expected to generate 2.11 times less return on investment than Thai Metal. But when comparing it to its historical volatility, TCM Public is 1.41 times less risky than Thai Metal. It trades about 0.08 of its potential returns per unit of risk. Thai Metal Drum is currently generating about 0.11 of returns per unit of risk over similar time horizon. If you would invest  2,450  in Thai Metal Drum on September 5, 2024 and sell it today you would lose (20.00) from holding Thai Metal Drum or give up 0.82% of portfolio value over 90 days.

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

TCM Public  vs.  Thai Metal Drum

TCM Public

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days TCM Public has generated negative risk-adjusted returns adding no value to investors with long positions. Despite conflicting performance in the last few months, the Stock's forward-looking signals remain quite persistent which may send shares a bit higher in January 2025. The latest mess may also be a sign of long-standing up-swing for the company institutional investors.

Thai Metal Drum

Risk-Adjusted Performance

8 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Thai Metal Drum are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. Despite quite conflicting fundamental indicators, Thai Metal disclosed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with TCM Public and Thai Metal

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

The idea behind TCM Public and Thai Metal Drum 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 Premium Stories module to follow Macroaxis premium stories from verified contributors across different equity types, categories and coverage scope.