Correlation Between Thai Industrial and Muang Thai

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

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

Diversification Opportunities for Thai Industrial and Muang Thai

-0.91

Correlation Coefficient

Thai Industrial  Muang Thai

Pay attention - limited upside

The 3 months correlation between Thai and Muang is -0.91. Overlapping area represents the amount of risk that can be diversified away by holding Thai Industrial and Muang Thai Insurance in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Muang Thai Insurance and Thai Industrial 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 Industrial are associated (or correlated) with Muang Thai. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Muang Thai Insurance has no effect on the direction of Thai Industrial i.e., Thai Industrial and Muang Thai go up and down completely randomly.

Pair Corralation between Thai Industrial and Muang Thai

Assuming the 90 days trading horizon Thai Industrial is expected to under-perform the Muang Thai. But the stock apears to be less risky and, when comparing its historical volatility, Thai Industrial is 1.68 times less risky than Muang Thai. The stock trades about -0.11 of its potential returns per unit of risk. The Muang Thai Insurance is currently generating about 0.14 of returns per unit of risk over similar time horizon. If you would invest  9,909  in Muang Thai Insurance on December 28, 2024 and sell it today you would earn a total of  1,041  from holding Muang Thai Insurance or generate 10.51% return on investment over 90 days.

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

Thai Industrial  vs.  Muang Thai Insurance

Thai Industrial

Risk-Adjusted Performance

Very Weak

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

Muang Thai Insurance

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Muang Thai Insurance are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. Despite quite weak forward indicators, Muang Thai may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Pair Trading with Thai Industrial and Muang Thai

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

The idea behind Thai Industrial and Muang Thai Insurance 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 Diagnostics module to use generated alerts and portfolio events aggregator to diagnose current holdings.