Correlation Between Thai Ha and Cho Thavee

Can any of the company-specific risk be diversified away by investing in both Thai Ha and Cho Thavee 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 Ha and Cho Thavee into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Thai Ha Public and Cho Thavee Public, you can compare the effects of market volatilities on Thai Ha and Cho Thavee 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 Ha with a short position of Cho Thavee. Check out your portfolio center. Please also check ongoing floating volatility patterns of Thai Ha and Cho Thavee.

Diversification Opportunities for Thai Ha and Cho Thavee

0.59

Correlation Coefficient

Thai Ha  Cho Thavee

Very weak diversification

The 3 months correlation between Thai and Cho is 0.59. Overlapping area represents the amount of risk that can be diversified away by holding Thai Ha Public and Cho Thavee Public in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Cho Thavee Public and Thai Ha 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 Ha Public are associated (or correlated) with Cho Thavee. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Cho Thavee Public has no effect on the direction of Thai Ha i.e., Thai Ha and Cho Thavee go up and down completely randomly.

Pair Corralation between Thai Ha and Cho Thavee

Assuming the 90 days trading horizon Thai Ha is expected to generate 42.61 times less return on investment than Cho Thavee. But when comparing it to its historical volatility, Thai Ha Public is 6.61 times less risky than Cho Thavee. It trades about 0.01 of its potential returns per unit of risk. Cho Thavee Public is currently generating about 0.06 of returns per unit of risk over similar time horizon. If you would invest  4.00  in Cho Thavee Public on September 23, 2024 and sell it today you would earn a total of  0.00  from holding Cho Thavee Public or generate 0.0% return on investment over 90 days.

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

Thai Ha Public  vs.  Cho Thavee Public

Thai Ha Public

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Thai Ha Public has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest weak performance, the Stock's fundamental drivers remain strong and the current disturbance on Wall Street may also be a sign of long term gains for the company investors.

Cho Thavee Public

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Cho Thavee Public has generated negative risk-adjusted returns adding no value to investors with long positions. Despite quite persistent basic indicators, Cho Thavee is not utilizing all of its potentials. The current stock price mess, may contribute to short-term losses for the institutional investors.

Pair Trading with Thai Ha and Cho Thavee

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

The idea behind Thai Ha Public and Cho Thavee Public 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 Sign In To Macroaxis module to sign in to explore Macroaxis' wealth optimization platform and fintech modules.