Correlation Between Thai Coating and Navakij Insurance

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

By analyzing existing cross correlation between Thai Coating Industrial and The Navakij Insurance, you can compare the effects of market volatilities on Thai Coating and Navakij Insurance 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 Coating with a short position of Navakij Insurance. Check out your portfolio center. Please also check ongoing floating volatility patterns of Thai Coating and Navakij Insurance.

Diversification Opportunities for Thai Coating and Navakij Insurance

0.09

Correlation Coefficient

Thai Coating  Navakij Insurance

Significant diversification

The 3 months correlation between Thai and Navakij is 0.09. Overlapping area represents the amount of risk that can be diversified away by holding Thai Coating Industrial and The Navakij Insurance in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Navakij Insurance and Thai Coating 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 Coating Industrial are associated (or correlated) with Navakij Insurance. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Navakij Insurance has no effect on the direction of Thai Coating i.e., Thai Coating and Navakij Insurance go up and down completely randomly.

Pair Corralation between Thai Coating and Navakij Insurance

Assuming the 90 days trading horizon Thai Coating Industrial is expected to generate 4.17 times more return on investment than Navakij Insurance. However, Thai Coating is 4.17 times more volatile than The Navakij Insurance. It trades about 0.1 of its potential returns per unit of risk. The Navakij Insurance is currently generating about 0.0 per unit of risk. If you would invest  2,500  in Thai Coating Industrial on September 24, 2024 and sell it today you would earn a total of  150.00  from holding Thai Coating Industrial or generate 6.0% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	94.74%
Values	Daily Returns

Thai Coating Industrial  vs.  The Navakij Insurance

Thai Coating Industrial

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Thai Coating Industrial are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. Despite somewhat conflicting fundamental drivers, Thai Coating sustained solid returns over the last few months and may actually be approaching a breakup point.

Navakij Insurance

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days The Navakij Insurance has generated negative risk-adjusted returns adding no value to investors with long positions. Despite quite persistent forward indicators, Navakij Insurance is not utilizing all of its potentials. The current stock price mess, may contribute to short-term losses for the institutional investors.

Pair Trading with Thai Coating and Navakij Insurance

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

The idea behind Thai Coating Industrial and The Navakij Insurance 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 Portfolio Comparator module to compare the composition, asset allocations and performance of any two portfolios in your account.