Correlation Between Thai Mui and Power Solution

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

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

Diversification Opportunities for Thai Mui and Power Solution

0.36

Correlation Coefficient

Thai Mui  Power Solution

Weak diversification

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

Pair Corralation between Thai Mui and Power Solution

Assuming the 90 days trading horizon Thai Mui is expected to under-perform the Power Solution. In addition to that, Thai Mui is 2.44 times more volatile than Power Solution Technologies. It trades about -0.11 of its total potential returns per unit of risk. Power Solution Technologies is currently generating about -0.03 per unit of volatility. If you would invest  49.00  in Power Solution Technologies on December 30, 2024 and sell it today you would lose (2.00) from holding Power Solution Technologies or give up 4.08% of portfolio value over 90 days.

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

Thai Mui  vs.  Power Solution Technologies

Thai Mui

Risk-Adjusted Performance

Very Weak

Over the last 90 days Thai Mui 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 fundamental drivers remain somewhat strong which may send shares a bit higher in April 2025. The current disturbance may also be a sign of long term up-swing for the company investors.

Power Solution Techn

Risk-Adjusted Performance

Very Weak

Over the last 90 days Power Solution Technologies has generated negative risk-adjusted returns adding no value to investors with long positions. Despite quite persistent forward-looking signals, Power Solution 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 Mui and Power Solution

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

The idea behind Thai Mui and Power Solution Technologies 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 Portfolio Rebalancing module to analyze risk-adjusted returns against different time horizons to find asset-allocation targets.