Correlation Between LH Hotel and Thai Union

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

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

Diversification Opportunities for LH Hotel and Thai Union

-0.4

Correlation Coefficient

LH Hotel  Thai Union

Very good diversification

The 3 months correlation between LHHOTEL and Thai is -0.4. Overlapping area represents the amount of risk that can be diversified away by holding LH Hotel Leasehold and Thai Union Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Thai Union Group and LH 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 LH Hotel Leasehold are associated (or correlated) with Thai Union. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Thai Union Group has no effect on the direction of LH Hotel i.e., LH Hotel and Thai Union go up and down completely randomly.

Pair Corralation between LH Hotel and Thai Union

Assuming the 90 days trading horizon LH Hotel Leasehold is expected to generate 1.07 times more return on investment than Thai Union. However, LH Hotel is 1.07 times more volatile than Thai Union Group. It trades about 0.07 of its potential returns per unit of risk. Thai Union Group is currently generating about -0.18 per unit of risk. If you would invest  1,287  in LH Hotel Leasehold on September 12, 2024 and sell it today you would earn a total of  63.00  from holding LH Hotel Leasehold or generate 4.9% return on investment over 90 days.

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

LH Hotel Leasehold  vs.  Thai Union Group

LH Hotel Leasehold

Risk-Adjusted Performance

5 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in LH Hotel Leasehold are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. Despite quite persistent basic indicators, LH Hotel is not utilizing all of its potentials. The latest stock price mess, may contribute to short-term losses for the institutional investors.

Thai Union Group

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Thai Union Group 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 fundamental drivers 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.

Pair Trading with LH Hotel and Thai Union

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

The idea behind LH Hotel Leasehold and Thai Union Group 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 Fundamentals Comparison module to compare fundamentals across multiple equities to find investing opportunities.