Correlation Between Thai Industrial and Prime Office

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

By analyzing existing cross correlation between Thai Industrial and Prime Office Leasehold, you can compare the effects of market volatilities on Thai Industrial and Prime Office 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 Prime Office. Check out your portfolio center. Please also check ongoing floating volatility patterns of Thai Industrial and Prime Office.

Diversification Opportunities for Thai Industrial and Prime Office

0.05

Correlation Coefficient

Thai Industrial  Prime Office

Significant diversification

The 3 months correlation between Thai and Prime is 0.05. Overlapping area represents the amount of risk that can be diversified away by holding Thai Industrial and Prime Office Leasehold in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Prime Office Leasehold 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 Prime Office. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Prime Office Leasehold has no effect on the direction of Thai Industrial i.e., Thai Industrial and Prime Office go up and down completely randomly.

Pair Corralation between Thai Industrial and Prime Office

Assuming the 90 days trading horizon Thai Industrial is expected to generate 0.7 times more return on investment than Prime Office. However, Thai Industrial is 1.42 times less risky than Prime Office. It trades about -0.17 of its potential returns per unit of risk. Prime Office Leasehold is currently generating about -0.3 per unit of risk. If you would invest  735.00  in Thai Industrial on December 5, 2024 and sell it today you would lose (25.00) from holding Thai Industrial or give up 3.4% of portfolio value over 90 days.

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

Thai Industrial  vs.  Prime Office Leasehold

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.

Prime Office Leasehold

Risk-Adjusted Performance

Very Weak

Over the last 90 days Prime Office Leasehold has generated negative risk-adjusted returns adding no value to fund investors. Despite latest weak performance, the Fund's forward-looking signals remain persistent and the latest mess on Wall Street may also be a sign of long-standing gains for the fund institutional investors.

Pair Trading with Thai Industrial and Prime Office

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

The idea behind Thai Industrial and Prime Office Leasehold 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 Stock Tickers module to use high-impact, comprehensive, and customizable stock tickers that can be easily integrated to any websites.