Correlation Between Thai Life and NForce Secure

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Can any of the company-specific risk be diversified away by investing in both Thai Life and NForce Secure 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 NForce Secure 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 nForce Secure Public, you can compare the effects of market volatilities on Thai Life and NForce Secure 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 NForce Secure. Check out your portfolio center. Please also check ongoing floating volatility patterns of Thai Life and NForce Secure.

Diversification Opportunities for Thai Life and NForce Secure

-0.44
  Correlation Coefficient

Very good diversification

The 3 months correlation between Thai and NForce is -0.44. Overlapping area represents the amount of risk that can be diversified away by holding Thai Life Insurance and nForce Secure Public in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on nForce Secure Public 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 NForce Secure. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of nForce Secure Public has no effect on the direction of Thai Life i.e., Thai Life and NForce Secure go up and down completely randomly.

Pair Corralation between Thai Life and NForce Secure

Assuming the 90 days trading horizon Thai Life Insurance is expected to under-perform the NForce Secure. In addition to that, Thai Life is 1.45 times more volatile than nForce Secure Public. It trades about -0.05 of its total potential returns per unit of risk. nForce Secure Public is currently generating about -0.05 per unit of volatility. If you would invest  1,250  in nForce Secure Public on September 26, 2024 and sell it today you would lose (20.00) from holding nForce Secure Public or give up 1.6% of portfolio value over 90 days.
Time Period3 Months [change]
DirectionMoves Against 
StrengthVery Weak
Accuracy100.0%
ValuesDaily Returns

Thai Life Insurance  vs.  nForce Secure Public

 Performance 
       Timeline  
Thai Life Insurance 

Risk-Adjusted Performance

0 of 100

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

Risk-Adjusted Performance

0 of 100

 
Weak
 
Strong
Very Weak
Over the last 90 days nForce Secure Public has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest weak performance, the Stock's fundamental indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for the company investors.

Thai Life and NForce Secure Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Thai Life and NForce Secure

The main advantage of trading using opposite Thai Life and NForce Secure positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Thai Life position performs unexpectedly, NForce Secure 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 NForce Secure will offset losses from the drop in NForce Secure's long position.
The idea behind Thai Life Insurance and nForce Secure Public 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 Competition Analyzer module to analyze and compare many basic indicators for a group of related or unrelated entities.

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