Correlation Between TOA PAINT and Thai Credit

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

By analyzing existing cross correlation between TOA PAINT and Thai Credit Pcl, you can compare the effects of market volatilities on TOA PAINT and Thai Credit 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 TOA PAINT with a short position of Thai Credit. Check out your portfolio center. Please also check ongoing floating volatility patterns of TOA PAINT and Thai Credit.

Diversification Opportunities for TOA PAINT and Thai Credit

0.73

Correlation Coefficient

TOA PAINT  Thai Credit

Poor diversification

The 3 months correlation between TOA and Thai is 0.73. Overlapping area represents the amount of risk that can be diversified away by holding TOA PAINT and Thai Credit Pcl in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Thai Credit Pcl and TOA PAINT 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 TOA PAINT are associated (or correlated) with Thai Credit. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Thai Credit Pcl has no effect on the direction of TOA PAINT i.e., TOA PAINT and Thai Credit go up and down completely randomly.

Pair Corralation between TOA PAINT and Thai Credit

Assuming the 90 days trading horizon TOA PAINT is expected to under-perform the Thai Credit. But the stock apears to be less risky and, when comparing its historical volatility, TOA PAINT is 1.41 times less risky than Thai Credit. The stock trades about -0.16 of its potential returns per unit of risk. The Thai Credit Pcl is currently generating about 0.05 of returns per unit of risk over similar time horizon. If you would invest  1,740  in Thai Credit Pcl on October 15, 2024 and sell it today you would earn a total of  40.00  from holding Thai Credit Pcl or generate 2.3% return on investment over 90 days.

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

TOA PAINT  vs.  Thai Credit Pcl

TOA PAINT

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days TOA PAINT has generated negative risk-adjusted returns adding no value to investors with long positions. Despite conflicting performance in the last few months, the Stock's fundamental drivers remain somewhat strong which may send shares a bit higher in February 2025. The current disturbance may also be a sign of long term up-swing for the company investors.

Thai Credit Pcl

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Thai Credit Pcl has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong technical and fundamental indicators, Thai Credit is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with TOA PAINT and Thai Credit

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

The idea behind TOA PAINT and Thai Credit Pcl 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 Global Markets Map module to get a quick overview of global market snapshot using zoomable world map. Drill down to check world indexes.