Correlation Between Thantawan Industry and Thai Poly

Can any of the company-specific risk be diversified away by investing in both Thantawan Industry and Thai Poly 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 Poly 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 Poly Acrylic, you can compare the effects of market volatilities on Thantawan Industry and Thai Poly 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 Poly. Check out your portfolio center. Please also check ongoing floating volatility patterns of Thantawan Industry and Thai Poly.

Diversification Opportunities for Thantawan Industry and Thai Poly

0.36

Correlation Coefficient

Thantawan Industry  Thai Poly

Weak diversification

The 3 months correlation between Thantawan and Thai is 0.36. Overlapping area represents the amount of risk that can be diversified away by holding Thantawan Industry Public and Thai Poly Acrylic in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Thai Poly Acrylic 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 Poly. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Thai Poly Acrylic has no effect on the direction of Thantawan Industry i.e., Thantawan Industry and Thai Poly go up and down completely randomly.

Pair Corralation between Thantawan Industry and Thai Poly

Assuming the 90 days trading horizon Thantawan Industry Public is expected to under-perform the Thai Poly. But the stock apears to be less risky and, when comparing its historical volatility, Thantawan Industry Public is 5.69 times less risky than Thai Poly. The stock trades about -0.04 of its potential returns per unit of risk. The Thai Poly Acrylic is currently generating about 0.03 of returns per unit of risk over similar time horizon. If you would invest  368.00  in Thai Poly Acrylic on December 3, 2024 and sell it today you would lose (8.00) from holding Thai Poly Acrylic or give up 2.17% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	98.33%
Values	Daily Returns

Thantawan Industry Public  vs.  Thai Poly Acrylic

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 Poly Acrylic

Risk-Adjusted Performance

Weak

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

Pair Trading with Thantawan Industry and Thai Poly

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

The idea behind Thantawan Industry Public and Thai Poly Acrylic 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 Bonds Directory module to find actively traded corporate debentures issued by US companies.