Correlation Between UNITED UTILITIES and Internet Thailand

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

By analyzing existing cross correlation between UNITED UTILITIES GR and Internet Thailand PCL, you can compare the effects of market volatilities on UNITED UTILITIES and Internet Thailand 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 UNITED UTILITIES with a short position of Internet Thailand. Check out your portfolio center. Please also check ongoing floating volatility patterns of UNITED UTILITIES and Internet Thailand.

Diversification Opportunities for UNITED UTILITIES and Internet Thailand

0.15

Correlation Coefficient

UNITED UTILITIES  Internet Thailand

Average diversification

The 3 months correlation between UNITED and Internet is 0.15. Overlapping area represents the amount of risk that can be diversified away by holding UNITED UTILITIES GR and Internet Thailand PCL in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Internet Thailand PCL and UNITED UTILITIES 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 UNITED UTILITIES GR are associated (or correlated) with Internet Thailand. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Internet Thailand PCL has no effect on the direction of UNITED UTILITIES i.e., UNITED UTILITIES and Internet Thailand go up and down completely randomly.

Pair Corralation between UNITED UTILITIES and Internet Thailand

Assuming the 90 days trading horizon UNITED UTILITIES GR is expected to under-perform the Internet Thailand. But the stock apears to be less risky and, when comparing its historical volatility, UNITED UTILITIES GR is 2.94 times less risky than Internet Thailand. The stock trades about -0.08 of its potential returns per unit of risk. The Internet Thailand PCL is currently generating about -0.02 of returns per unit of risk over similar time horizon. If you would invest  16.00  in Internet Thailand PCL on December 25, 2024 and sell it today you would lose (2.00) from holding Internet Thailand PCL or give up 12.5% of portfolio value over 90 days.

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

UNITED UTILITIES GR  vs.  Internet Thailand PCL

UNITED UTILITIES

Risk-Adjusted Performance

Very Weak

Over the last 90 days UNITED UTILITIES GR has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest fragile performance, the Stock's basic indicators remain stable and the newest uproar on Wall Street may also be a sign of mid-term gains for the firm private investors.

Internet Thailand PCL

Risk-Adjusted Performance

Very Weak

Over the last 90 days Internet Thailand PCL has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest fragile performance, the Stock's basic indicators remain stable and the newest uproar on Wall Street may also be a sign of mid-term gains for the firm private investors.

Pair Trading with UNITED UTILITIES and Internet Thailand

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

The idea behind UNITED UTILITIES GR and Internet Thailand 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 Risk-Return Analysis module to view associations between returns expected from investment and the risk you assume.