Correlation Between Thai Poly and Union Pioneer

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

By analyzing existing cross correlation between Thai Poly Acrylic and Union Pioneer Public, you can compare the effects of market volatilities on Thai Poly and Union Pioneer 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 Poly with a short position of Union Pioneer. Check out your portfolio center. Please also check ongoing floating volatility patterns of Thai Poly and Union Pioneer.

Diversification Opportunities for Thai Poly and Union Pioneer

0.63

Correlation Coefficient

Thai Poly  Union Pioneer

Poor diversification

The 3 months correlation between Thai and Union is 0.63. Overlapping area represents the amount of risk that can be diversified away by holding Thai Poly Acrylic and Union Pioneer Public in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Union Pioneer Public and Thai Poly 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 Poly Acrylic are associated (or correlated) with Union Pioneer. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Union Pioneer Public has no effect on the direction of Thai Poly i.e., Thai Poly and Union Pioneer go up and down completely randomly.

Pair Corralation between Thai Poly and Union Pioneer

Assuming the 90 days trading horizon Thai Poly Acrylic is expected to generate 3.86 times more return on investment than Union Pioneer. However, Thai Poly is 3.86 times more volatile than Union Pioneer Public. It trades about 0.01 of its potential returns per unit of risk. Union Pioneer Public is currently generating about -0.21 per unit of risk. If you would invest  360.00  in Thai Poly Acrylic on October 12, 2024 and sell it today you would lose (10.00) from holding Thai Poly Acrylic or give up 2.78% of portfolio value over 90 days.

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

Thai Poly Acrylic  vs.  Union Pioneer Public

Thai Poly Acrylic

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Thai Poly Acrylic has generated negative risk-adjusted returns adding no value to investors with long positions. Despite weak performance in the last few months, the Stock's basic indicators remain quite persistent which may send shares a bit higher in February 2025. The latest mess may also be a sign of long-standing up-swing for the company institutional investors.

Union Pioneer Public

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Union Pioneer Public has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest conflicting performance, the Stock's technical and fundamental indicators remain persistent and the latest mess on Wall Street may also be a sign of long-standing gains for the company institutional investors.

Pair Trading with Thai Poly and Union Pioneer

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

The idea behind Thai Poly Acrylic and Union Pioneer 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 Portfolio Optimization module to compute new portfolio that will generate highest expected return given your specified tolerance for risk.