Correlation Between Thai Rung and Thai OPP

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

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

Diversification Opportunities for Thai Rung and Thai OPP

0.86

Correlation Coefficient

Thai Rung  Thai OPP

Very poor diversification

The 3 months correlation between Thai and Thai is 0.86. Overlapping area represents the amount of risk that can be diversified away by holding Thai Rung Union and Thai OPP Public in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Thai OPP Public and Thai Rung 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 Rung Union are associated (or correlated) with Thai OPP. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Thai OPP Public has no effect on the direction of Thai Rung i.e., Thai Rung and Thai OPP go up and down completely randomly.

Pair Corralation between Thai Rung and Thai OPP

Assuming the 90 days trading horizon Thai Rung Union is expected to generate 0.63 times more return on investment than Thai OPP. However, Thai Rung Union is 1.6 times less risky than Thai OPP. It trades about -0.09 of its potential returns per unit of risk. Thai OPP Public is currently generating about -0.09 per unit of risk. If you would invest  340.00  in Thai Rung Union on December 21, 2024 and sell it today you would lose (16.00) from holding Thai Rung Union or give up 4.71% of portfolio value over 90 days.

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

Thai Rung Union  vs.  Thai OPP Public

Thai Rung Union

Risk-Adjusted Performance

Very Weak

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

Thai OPP Public

Risk-Adjusted Performance

Very Weak

Over the last 90 days Thai OPP Public has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest conflicting performance, the Stock's forward-looking signals 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 Rung and Thai OPP

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

The idea behind Thai Rung Union and Thai OPP 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 Transaction History module to view history of all your transactions and understand their impact on performance.