Correlation Between Thaicom Public and TMC Industrial

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

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

Diversification Opportunities for Thaicom Public and TMC Industrial

0.17

Correlation Coefficient

Thaicom Public  TMC Industrial

Average diversification

The 3 months correlation between Thaicom and TMC is 0.17. Overlapping area represents the amount of risk that can be diversified away by holding Thaicom Public and TMC Industrial Public in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on TMC Industrial Public and Thaicom 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 Thaicom Public are associated (or correlated) with TMC Industrial. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of TMC Industrial Public has no effect on the direction of Thaicom Public i.e., Thaicom Public and TMC Industrial go up and down completely randomly.

Pair Corralation between Thaicom Public and TMC Industrial

Assuming the 90 days trading horizon Thaicom Public is expected to generate 0.69 times more return on investment than TMC Industrial. However, Thaicom Public is 1.45 times less risky than TMC Industrial. It trades about 0.06 of its potential returns per unit of risk. TMC Industrial Public is currently generating about 0.03 per unit of risk. If you would invest  1,270  in Thaicom Public on September 14, 2024 and sell it today you would earn a total of  120.00  from holding Thaicom Public or generate 9.45% return on investment over 90 days.

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

Thaicom Public  vs.  TMC Industrial Public

Thaicom Public

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Thaicom Public are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak fundamental drivers, Thaicom Public sustained solid returns over the last few months and may actually be approaching a breakup point.

TMC Industrial Public

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in TMC Industrial Public are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. Despite quite weak fundamental indicators, TMC Industrial may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with Thaicom Public and TMC Industrial

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

The idea behind Thaicom Public and TMC Industrial Public 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 Backtesting module to avoid under-diversification and over-optimization by backtesting your portfolios.