Correlation Between TMT Steel and Haad Thip

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

By analyzing existing cross correlation between TMT Steel Public and Haad Thip Public, you can compare the effects of market volatilities on TMT Steel and Haad Thip 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 TMT Steel with a short position of Haad Thip. Check out your portfolio center. Please also check ongoing floating volatility patterns of TMT Steel and Haad Thip.

Diversification Opportunities for TMT Steel and Haad Thip

-0.62

Correlation Coefficient

TMT Steel  Haad Thip

Excellent diversification

The 3 months correlation between TMT and Haad is -0.62. Overlapping area represents the amount of risk that can be diversified away by holding TMT Steel Public and Haad Thip Public in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Haad Thip Public and TMT Steel 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 TMT Steel Public are associated (or correlated) with Haad Thip. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Haad Thip Public has no effect on the direction of TMT Steel i.e., TMT Steel and Haad Thip go up and down completely randomly.

Pair Corralation between TMT Steel and Haad Thip

Assuming the 90 days trading horizon TMT Steel Public is expected to under-perform the Haad Thip. In addition to that, TMT Steel is 2.58 times more volatile than Haad Thip Public. It trades about -0.03 of its total potential returns per unit of risk. Haad Thip Public is currently generating about 0.06 per unit of volatility. If you would invest  1,610  in Haad Thip Public on December 20, 2024 and sell it today you would earn a total of  40.00  from holding Haad Thip Public or generate 2.48% return on investment over 90 days.

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

TMT Steel Public  vs.  Haad Thip Public

TMT Steel Public

Risk-Adjusted Performance

Very Weak

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

Haad Thip Public

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Haad Thip Public are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. Despite quite persistent fundamental indicators, Haad Thip is not utilizing all of its potentials. The latest stock price mess, may contribute to short-term losses for the institutional investors.

Pair Trading with TMT Steel and Haad Thip

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

The idea behind TMT Steel Public and Haad Thip 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 ETF Categories module to list of ETF categories grouped based on various criteria, such as the investment strategy or type of investments.