Correlation Between TPI Polene and Thai Rubber

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

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

Diversification Opportunities for TPI Polene and Thai Rubber

0.83

Correlation Coefficient

TPI Polene  Thai Rubber

Very poor diversification

The 3 months correlation between TPI and Thai is 0.83. Overlapping area represents the amount of risk that can be diversified away by holding TPI Polene Public and Thai Rubber Latex in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Thai Rubber Latex and TPI Polene 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 TPI Polene Public are associated (or correlated) with Thai Rubber. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Thai Rubber Latex has no effect on the direction of TPI Polene i.e., TPI Polene and Thai Rubber go up and down completely randomly.

Pair Corralation between TPI Polene and Thai Rubber

Assuming the 90 days trading horizon TPI Polene Public is expected to generate 0.45 times more return on investment than Thai Rubber. However, TPI Polene Public is 2.25 times less risky than Thai Rubber. It trades about -0.2 of its potential returns per unit of risk. Thai Rubber Latex is currently generating about -0.18 per unit of risk. If you would invest  117.00  in TPI Polene Public on October 20, 2024 and sell it today you would lose (16.00) from holding TPI Polene Public or give up 13.68% of portfolio value over 90 days.

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

TPI Polene Public  vs.  Thai Rubber Latex

TPI Polene Public

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days TPI Polene Public 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 Rubber Latex

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Thai Rubber Latex 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.

Pair Trading with TPI Polene and Thai Rubber

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

The idea behind TPI Polene Public and Thai Rubber Latex 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 My Watchlist Analysis module to analyze my current watchlist and to refresh optimization strategy. Macroaxis watchlist is based on self-learning algorithm to remember stocks you like.