Correlation Between Thai Packaging and Thai Film

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

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

Diversification Opportunities for Thai Packaging and Thai Film

0.26

Correlation Coefficient

Thai Packaging  Thai Film

Modest diversification

The 3 months correlation between Thai and Thai is 0.26. Overlapping area represents the amount of risk that can be diversified away by holding Thai Packaging Printing and Thai Film Industries in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Thai Film Industries and Thai Packaging 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 Packaging Printing are associated (or correlated) with Thai Film. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Thai Film Industries has no effect on the direction of Thai Packaging i.e., Thai Packaging and Thai Film go up and down completely randomly.

Pair Corralation between Thai Packaging and Thai Film

Assuming the 90 days trading horizon Thai Packaging Printing is expected to generate 15.32 times more return on investment than Thai Film. However, Thai Packaging is 15.32 times more volatile than Thai Film Industries. It trades about 0.12 of its potential returns per unit of risk. Thai Film Industries is currently generating about 0.02 per unit of risk. If you would invest  1,300  in Thai Packaging Printing on September 12, 2024 and sell it today you would lose (60.00) from holding Thai Packaging Printing or give up 4.62% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	98.36%
Values	Daily Returns

Thai Packaging Printing  vs.  Thai Film Industries

Thai Packaging Printing

Risk-Adjusted Performance

9 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Thai Packaging Printing are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. Despite quite conflicting basic indicators, Thai Packaging disclosed solid returns over the last few months and may actually be approaching a breakup point.

Thai Film Industries

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Thai Film Industries are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. Despite quite conflicting forward indicators, Thai Film may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with Thai Packaging and Thai Film

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

The idea behind Thai Packaging Printing and Thai Film Industries 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 ETFs module to find actively traded Exchange Traded Funds (ETF) from around the world.