Correlation Between Thai Metal and Country Group

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

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

Diversification Opportunities for Thai Metal and Country Group

-0.03

Correlation Coefficient

Thai Metal  Country Group

Good diversification

The 3 months correlation between Thai and Country is -0.03. Overlapping area represents the amount of risk that can be diversified away by holding Thai Metal Drum and Country Group Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Country Group Holdings and Thai Metal 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 Metal Drum are associated (or correlated) with Country Group. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Country Group Holdings has no effect on the direction of Thai Metal i.e., Thai Metal and Country Group go up and down completely randomly.

Pair Corralation between Thai Metal and Country Group

Assuming the 90 days trading horizon Thai Metal Drum is expected to generate 1.42 times more return on investment than Country Group. However, Thai Metal is 1.42 times more volatile than Country Group Holdings. It trades about 0.16 of its potential returns per unit of risk. Country Group Holdings is currently generating about 0.11 per unit of risk. If you would invest  2,460  in Thai Metal Drum on August 30, 2024 and sell it today you would earn a total of  20.00  from holding Thai Metal Drum or generate 0.81% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	98.41%
Values	Daily Returns

Thai Metal Drum  vs.  Country Group Holdings

Thai Metal Drum

Risk-Adjusted Performance

12 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Thai Metal Drum are ranked lower than 12 (%) of all global equities and portfolios over the last 90 days. Despite quite conflicting fundamental indicators, Thai Metal disclosed solid returns over the last few months and may actually be approaching a breakup point.

Country Group Holdings

Risk-Adjusted Performance

8 of 100

OK

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

Pair Trading with Thai Metal and Country Group

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

The idea behind Thai Metal Drum and Country Group Holdings 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 Comparator module to compare the composition, asset allocations and performance of any two portfolios in your account.