Correlation Between Thai Energy and AJ Advance

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Can any of the company-specific risk be diversified away by investing in both Thai Energy and AJ Advance 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 Energy and AJ Advance into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Thai Energy Storage and AJ Advance Technology, you can compare the effects of market volatilities on Thai Energy and AJ Advance 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 Energy with a short position of AJ Advance. Check out your portfolio center. Please also check ongoing floating volatility patterns of Thai Energy and AJ Advance.

Diversification Opportunities for Thai Energy and AJ Advance

-0.71
  Correlation Coefficient

Pay attention - limited upside

The 3 months correlation between Thai and AJA is -0.71. Overlapping area represents the amount of risk that can be diversified away by holding Thai Energy Storage and AJ Advance Technology in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on AJ Advance Technology and Thai Energy 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 Energy Storage are associated (or correlated) with AJ Advance. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of AJ Advance Technology has no effect on the direction of Thai Energy i.e., Thai Energy and AJ Advance go up and down completely randomly.

Pair Corralation between Thai Energy and AJ Advance

Assuming the 90 days trading horizon Thai Energy Storage is expected to generate 0.08 times more return on investment than AJ Advance. However, Thai Energy Storage is 12.91 times less risky than AJ Advance. It trades about 0.0 of its potential returns per unit of risk. AJ Advance Technology is currently generating about -0.07 per unit of risk. If you would invest  5,300  in Thai Energy Storage on September 14, 2024 and sell it today you would earn a total of  0.00  from holding Thai Energy Storage or generate 0.0% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Against 
StrengthWeak
Accuracy100.0%
ValuesDaily Returns

Thai Energy Storage  vs.  AJ Advance Technology

 Performance 
       Timeline  
Thai Energy Storage 

Risk-Adjusted Performance

0 of 100

 
Weak
 
Strong
Very Weak
Over the last 90 days Thai Energy Storage has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong basic indicators, Thai Energy is not utilizing all of its potentials. The latest stock price disturbance, may contribute to short-term losses for the investors.
AJ Advance Technology 

Risk-Adjusted Performance

0 of 100

 
Weak
 
Strong
Very Weak
Over the last 90 days AJ Advance Technology has generated negative risk-adjusted returns adding no value to investors with long positions. Despite conflicting performance in the last few months, the Stock's basic indicators remain quite persistent which may send shares a bit higher in January 2025. The latest mess may also be a sign of long-standing up-swing for the company institutional investors.

Thai Energy and AJ Advance Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Thai Energy and AJ Advance

The main advantage of trading using opposite Thai Energy and AJ Advance positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Thai Energy position performs unexpectedly, AJ Advance 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 AJ Advance will offset losses from the drop in AJ Advance's long position.
The idea behind Thai Energy Storage and AJ Advance Technology 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.
Check out your portfolio center.
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 Theme Ratings module to determine theme ratings based on digital equity recommendations. Macroaxis theme ratings are based on combination of fundamental analysis and risk-adjusted market performance.

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