Correlation Between Engie SA and THAI BEVERAGE

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

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

Diversification Opportunities for Engie SA and THAI BEVERAGE

-0.38

Correlation Coefficient

Engie SA  THAI BEVERAGE

Very good diversification

The 3 months correlation between Engie and THAI is -0.38. Overlapping area represents the amount of risk that can be diversified away by holding Engie SA and THAI BEVERAGE in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on THAI BEVERAGE and Engie SA 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 Engie SA 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 Engie SA i.e., Engie SA and THAI BEVERAGE go up and down completely randomly.

Pair Corralation between Engie SA and THAI BEVERAGE

Assuming the 90 days horizon Engie SA is expected to generate 4.34 times less return on investment than THAI BEVERAGE. But when comparing it to its historical volatility, Engie SA is 4.16 times less risky than THAI BEVERAGE. It trades about 0.05 of its potential returns per unit of risk. THAI BEVERAGE is currently generating about 0.05 of returns per unit of risk over similar time horizon. If you would invest  15.00  in THAI BEVERAGE on September 21, 2024 and sell it today you would earn a total of  22.00  from holding THAI BEVERAGE or generate 146.67% return on investment over 90 days.

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

Engie SA  vs.  THAI BEVERAGE

Engie SA

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Engie SA has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable basic indicators, Engie SA is not utilizing all of its potentials. The latest stock price disturbance, may contribute to mid-run losses for the stockholders.

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 unsteady basic indicators, THAI BEVERAGE may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with Engie SA and THAI BEVERAGE

The main advantage of trading using opposite Engie SA and THAI BEVERAGE positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Engie SA 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 Engie SA 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 Balance Of Power module to check stock momentum by analyzing Balance Of Power indicator and other technical ratios.