Correlation Between THORNEY TECHS and SANOK RUBBER

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

By analyzing existing cross correlation between THORNEY TECHS LTD and SANOK RUBBER ZY, you can compare the effects of market volatilities on THORNEY TECHS and SANOK 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 THORNEY TECHS with a short position of SANOK RUBBER. Check out your portfolio center. Please also check ongoing floating volatility patterns of THORNEY TECHS and SANOK RUBBER.

Diversification Opportunities for THORNEY TECHS and SANOK RUBBER

-0.46

Correlation Coefficient

THORNEY TECHS  SANOK RUBBER

Very good diversification

The 3 months correlation between THORNEY and SANOK is -0.46. Overlapping area represents the amount of risk that can be diversified away by holding THORNEY TECHS LTD and SANOK RUBBER ZY in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SANOK RUBBER ZY and THORNEY TECHS 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 THORNEY TECHS LTD are associated (or correlated) with SANOK RUBBER. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of SANOK RUBBER ZY has no effect on the direction of THORNEY TECHS i.e., THORNEY TECHS and SANOK RUBBER go up and down completely randomly.

Pair Corralation between THORNEY TECHS and SANOK RUBBER

Assuming the 90 days horizon THORNEY TECHS is expected to generate 2.69 times less return on investment than SANOK RUBBER. In addition to that, THORNEY TECHS is 1.86 times more volatile than SANOK RUBBER ZY. It trades about 0.01 of its total potential returns per unit of risk. SANOK RUBBER ZY is currently generating about 0.04 per unit of volatility. If you would invest  409.00  in SANOK RUBBER ZY on October 5, 2024 and sell it today you would earn a total of  94.00  from holding SANOK RUBBER ZY or generate 22.98% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	100.0%
Values	Daily Returns

THORNEY TECHS LTD  vs.  SANOK RUBBER ZY

THORNEY TECHS LTD

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days THORNEY TECHS LTD has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable basic indicators, THORNEY TECHS is not utilizing all of its potentials. The newest stock price disturbance, may contribute to mid-run losses for the stockholders.

SANOK RUBBER ZY

Risk-Adjusted Performance

0 of 100

Good

Over the last 90 days SANOK RUBBER ZY has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly fragile basic indicators, SANOK RUBBER may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Pair Trading with THORNEY TECHS and SANOK RUBBER

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

The idea behind THORNEY TECHS LTD and SANOK RUBBER ZY 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 Rebalancing module to analyze risk-adjusted returns against different time horizons to find asset-allocation targets.