Correlation Between Thai Life and Grande Asset

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

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

Diversification Opportunities for Thai Life and Grande Asset

0.38

Correlation Coefficient

Thai Life  Grande Asset

Weak diversification

The 3 months correlation between Thai and Grande is 0.38. Overlapping area represents the amount of risk that can be diversified away by holding Thai Life Insurance and Grande Asset Hotels in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Grande Asset Hotels and Thai Life 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 Life Insurance are associated (or correlated) with Grande Asset. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Grande Asset Hotels has no effect on the direction of Thai Life i.e., Thai Life and Grande Asset go up and down completely randomly.

Pair Corralation between Thai Life and Grande Asset

Assuming the 90 days trading horizon Thai Life Insurance is expected to generate 0.37 times more return on investment than Grande Asset. However, Thai Life Insurance is 2.7 times less risky than Grande Asset. It trades about 0.12 of its potential returns per unit of risk. Grande Asset Hotels is currently generating about -0.1 per unit of risk. If you would invest  1,060  in Thai Life Insurance on September 5, 2024 and sell it today you would earn a total of  70.00  from holding Thai Life Insurance or generate 6.6% return on investment over 90 days.

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

Thai Life Insurance  vs.  Grande Asset Hotels

Thai Life Insurance

Risk-Adjusted Performance

16 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Thai Life Insurance are ranked lower than 16 (%) of all global equities and portfolios over the last 90 days. Despite quite weak forward indicators, Thai Life disclosed solid returns over the last few months and may actually be approaching a breakup point.

Grande Asset Hotels

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Grande Asset Hotels are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. Despite somewhat conflicting fundamental drivers, Grande Asset sustained solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Thai Life and Grande Asset

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

The idea behind Thai Life Insurance and Grande Asset Hotels 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 Technical Analysis module to check basic technical indicators and analysis based on most latest market data.