Correlation Between Edwards Lifesciences and THAI BEVERAGE

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

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

Diversification Opportunities for Edwards Lifesciences and THAI BEVERAGE

0.64

Correlation Coefficient

Edwards Lifesciences  THAI BEVERAGE

Poor diversification

The 3 months correlation between Edwards and THAI is 0.64. Overlapping area represents the amount of risk that can be diversified away by holding Edwards Lifesciences and THAI BEVERAGE in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on THAI BEVERAGE and Edwards Lifesciences 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 Edwards Lifesciences 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 Edwards Lifesciences i.e., Edwards Lifesciences and THAI BEVERAGE go up and down completely randomly.

Pair Corralation between Edwards Lifesciences and THAI BEVERAGE

Assuming the 90 days horizon Edwards Lifesciences is expected to generate 0.92 times more return on investment than THAI BEVERAGE. However, Edwards Lifesciences is 1.08 times less risky than THAI BEVERAGE. It trades about 0.14 of its potential returns per unit of risk. THAI BEVERAGE is currently generating about -0.06 per unit of risk. If you would invest  6,826  in Edwards Lifesciences on September 27, 2024 and sell it today you would earn a total of  329.00  from holding Edwards Lifesciences or generate 4.82% return on investment over 90 days.

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

Edwards Lifesciences  vs.  THAI BEVERAGE

Edwards Lifesciences

Risk-Adjusted Performance

15 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Edwards Lifesciences are ranked lower than 15 (%) of all global equities and portfolios over the last 90 days. Despite nearly unsteady basic indicators, Edwards Lifesciences reported solid returns over the last few months and may actually be approaching a breakup point.

THAI BEVERAGE

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in THAI BEVERAGE are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. In spite of rather sound basic indicators, THAI BEVERAGE is not utilizing all of its potentials. The newest stock price tumult, may contribute to shorter-term losses for the shareholders.

Pair Trading with Edwards Lifesciences and THAI BEVERAGE

The main advantage of trading using opposite Edwards Lifesciences and THAI BEVERAGE positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Edwards Lifesciences 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 Edwards Lifesciences 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.

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 USA ETFs module to find actively traded Exchange Traded Funds (ETF) in USA.