Correlation Between Thai Reinsurance and TISCO Financial

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

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

Diversification Opportunities for Thai Reinsurance and TISCO Financial

0.47

Correlation Coefficient

Thai Reinsurance  TISCO Financial

Very weak diversification

The 3 months correlation between Thai and TISCO is 0.47. Overlapping area represents the amount of risk that can be diversified away by holding Thai Reinsurance Public and TISCO Financial Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on TISCO Financial Group and Thai Reinsurance 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 Reinsurance Public are associated (or correlated) with TISCO Financial. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of TISCO Financial Group has no effect on the direction of Thai Reinsurance i.e., Thai Reinsurance and TISCO Financial go up and down completely randomly.

Pair Corralation between Thai Reinsurance and TISCO Financial

Assuming the 90 days trading horizon Thai Reinsurance Public is expected to generate 219.46 times more return on investment than TISCO Financial. However, Thai Reinsurance is 219.46 times more volatile than TISCO Financial Group. It trades about 0.11 of its potential returns per unit of risk. TISCO Financial Group is currently generating about 0.09 per unit of risk. If you would invest  57.00  in Thai Reinsurance Public on September 2, 2024 and sell it today you would lose (1.00) from holding Thai Reinsurance Public or give up 1.75% of portfolio value over 90 days.

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

Thai Reinsurance Public  vs.  TISCO Financial Group

Thai Reinsurance Public

Risk-Adjusted Performance

8 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Thai Reinsurance Public are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. Despite quite weak forward-looking signals, Thai Reinsurance disclosed solid returns over the last few months and may actually be approaching a breakup point.

TISCO Financial Group

Risk-Adjusted Performance

7 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in TISCO Financial Group are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. Despite somewhat strong fundamental drivers, TISCO Financial is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Thai Reinsurance and TISCO Financial

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

The idea behind Thai Reinsurance Public and TISCO Financial Group 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 Bollinger Bands module to use Bollinger Bands indicator to analyze target price for a given investing horizon.