Correlation Between Thantawan Industry and Thai Nam

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

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

Diversification Opportunities for Thantawan Industry and Thai Nam

-0.15

Correlation Coefficient

Thantawan Industry  Thai Nam

Good diversification

The 3 months correlation between Thantawan and Thai is -0.15. Overlapping area represents the amount of risk that can be diversified away by holding Thantawan Industry Public and Thai Nam Plastic in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Thai Nam Plastic and Thantawan Industry 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 Thantawan Industry Public are associated (or correlated) with Thai Nam. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Thai Nam Plastic has no effect on the direction of Thantawan Industry i.e., Thantawan Industry and Thai Nam go up and down completely randomly.

Pair Corralation between Thantawan Industry and Thai Nam

Assuming the 90 days trading horizon Thantawan Industry Public is expected to under-perform the Thai Nam. But the stock apears to be less risky and, when comparing its historical volatility, Thantawan Industry Public is 2.48 times less risky than Thai Nam. The stock trades about -0.08 of its potential returns per unit of risk. The Thai Nam Plastic is currently generating about -0.03 of returns per unit of risk over similar time horizon. If you would invest  86.00  in Thai Nam Plastic on December 30, 2024 and sell it today you would lose (6.00) from holding Thai Nam Plastic or give up 6.98% of portfolio value over 90 days.

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

Thantawan Industry Public  vs.  Thai Nam Plastic

Thantawan Industry Public

Risk-Adjusted Performance

Very Weak

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

Thai Nam Plastic

Risk-Adjusted Performance

Very Weak

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

Pair Trading with Thantawan Industry and Thai Nam

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

The idea behind Thantawan Industry Public and Thai Nam Plastic 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 Equity Valuation module to check real value of public entities based on technical and fundamental data.