Correlation Between LPN Development and Thoresen Thai
Can any of the company-specific risk be diversified away by investing in both LPN Development and Thoresen Thai 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 LPN Development and Thoresen Thai into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between LPN Development Public and Thoresen Thai Agencies, you can compare the effects of market volatilities on LPN Development and Thoresen Thai 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 LPN Development with a short position of Thoresen Thai. Check out your portfolio center. Please also check ongoing floating volatility patterns of LPN Development and Thoresen Thai.
Diversification Opportunities for LPN Development and Thoresen Thai
0.44 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between LPN and Thoresen is 0.44. Overlapping area represents the amount of risk that can be diversified away by holding LPN Development Public and Thoresen Thai Agencies in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Thoresen Thai Agencies and LPN Development 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 LPN Development Public are associated (or correlated) with Thoresen Thai. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Thoresen Thai Agencies has no effect on the direction of LPN Development i.e., LPN Development and Thoresen Thai go up and down completely randomly.
Pair Corralation between LPN Development and Thoresen Thai
Assuming the 90 days trading horizon LPN Development Public is expected to generate 34.61 times more return on investment than Thoresen Thai. However, LPN Development is 34.61 times more volatile than Thoresen Thai Agencies. It trades about 0.08 of its potential returns per unit of risk. Thoresen Thai Agencies is currently generating about -0.1 per unit of risk. If you would invest 317.00 in LPN Development Public on September 24, 2024 and sell it today you would lose (55.00) from holding LPN Development Public or give up 17.35% of portfolio value over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Weak |
Accuracy | 100.0% |
Values | Daily Returns |
LPN Development Public vs. Thoresen Thai Agencies
Performance |
Timeline |
LPN Development Public |
Thoresen Thai Agencies |
LPN Development and Thoresen Thai Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with LPN Development and Thoresen Thai
The main advantage of trading using opposite LPN Development and Thoresen Thai positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if LPN Development position performs unexpectedly, Thoresen Thai 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 Thoresen Thai will offset losses from the drop in Thoresen Thai's long position.LPN Development vs. Bangkok Bank Public | LPN Development vs. The Siam Cement | LPN Development vs. PTT Public | LPN Development vs. SCB X Public |
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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 Fundamental Analysis module to view fundamental data based on most recent published financial statements.
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