Correlation Between Dalata Hotel and THAI BEVERAGE

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

By analyzing existing cross correlation between Dalata Hotel Group and THAI BEVERAGE, you can compare the effects of market volatilities on Dalata Hotel 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 Dalata Hotel with a short position of THAI BEVERAGE. Check out your portfolio center. Please also check ongoing floating volatility patterns of Dalata Hotel and THAI BEVERAGE.

Diversification Opportunities for Dalata Hotel and THAI BEVERAGE

0.27

Correlation Coefficient

Dalata Hotel  THAI BEVERAGE

Modest diversification

The 3 months correlation between Dalata and THAI is 0.27. Overlapping area represents the amount of risk that can be diversified away by holding Dalata Hotel Group and THAI BEVERAGE in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on THAI BEVERAGE and Dalata Hotel 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 Dalata Hotel Group 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 has no effect on the direction of Dalata Hotel i.e., Dalata Hotel and THAI BEVERAGE go up and down completely randomly.

Pair Corralation between Dalata Hotel and THAI BEVERAGE

Assuming the 90 days horizon Dalata Hotel Group is expected to generate 0.71 times more return on investment than THAI BEVERAGE. However, Dalata Hotel Group is 1.4 times less risky than THAI BEVERAGE. It trades about 0.1 of its potential returns per unit of risk. THAI BEVERAGE is currently generating about 0.05 per unit of risk. If you would invest  411.00  in Dalata Hotel Group on September 23, 2024 and sell it today you would earn a total of  47.00  from holding Dalata Hotel Group or generate 11.44% return on investment over 90 days.

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

Dalata Hotel Group  vs.  THAI BEVERAGE

Dalata Hotel Group

Risk-Adjusted Performance

7 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Dalata Hotel Group are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, Dalata Hotel may actually be approaching a critical reversion point that can send shares even higher in January 2025.

THAI BEVERAGE

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in THAI BEVERAGE are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. In spite of rather uncertain basic indicators, THAI BEVERAGE may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with Dalata Hotel and THAI BEVERAGE

The main advantage of trading using opposite Dalata Hotel and THAI BEVERAGE positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Dalata Hotel 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 Dalata Hotel Group and THAI BEVERAGE 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 Optimization module to compute new portfolio that will generate highest expected return given your specified tolerance for risk.