Correlation Between WALMART and Thai Beverage

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

By analyzing existing cross correlation between WALMART INC 62 and Thai Beverage PCL, you can compare the effects of market volatilities on WALMART and Thai Beverage 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 WALMART with a short position of Thai Beverage. Check out your portfolio center. Please also check ongoing floating volatility patterns of WALMART and Thai Beverage.

Diversification Opportunities for WALMART and Thai Beverage

0.13

Correlation Coefficient

WALMART  Thai Beverage

Average diversification

The 3 months correlation between WALMART and Thai is 0.13. Overlapping area represents the amount of risk that can be diversified away by holding WALMART INC 62 and Thai Beverage PCL in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Thai Beverage PCL and WALMART 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 WALMART INC 62 are associated (or correlated) with Thai Beverage. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Thai Beverage PCL has no effect on the direction of WALMART i.e., WALMART and Thai Beverage go up and down completely randomly.

Pair Corralation between WALMART and Thai Beverage

Assuming the 90 days trading horizon WALMART INC 62 is expected to under-perform the Thai Beverage. In addition to that, WALMART is 1.54 times more volatile than Thai Beverage PCL. It trades about -0.01 of its total potential returns per unit of risk. Thai Beverage PCL is currently generating about 0.13 per unit of volatility. If you would invest  3,231  in Thai Beverage PCL on December 4, 2024 and sell it today you would earn a total of  136.00  from holding Thai Beverage PCL or generate 4.21% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	98.33%
Values	Daily Returns

WALMART INC 62  vs.  Thai Beverage PCL

WALMART INC 62

Risk-Adjusted Performance

Very Weak

Over the last 90 days WALMART INC 62 has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong basic indicators, WALMART is not utilizing all of its potentials. The recent stock price disturbance, may contribute to short-term losses for the investors.

Thai Beverage PCL

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Thai Beverage PCL are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. In spite of fairly strong basic indicators, Thai Beverage is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with WALMART and Thai Beverage

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

The idea behind WALMART INC 62 and Thai Beverage PCL 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 Options Analysis module to analyze and evaluate options and option chains as a potential hedge for your portfolios.