Correlation Between Ribbon Communications and Internet Thailand

Can any of the company-specific risk be diversified away by investing in both Ribbon Communications and Internet Thailand 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 Ribbon Communications and Internet Thailand into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Ribbon Communications and Internet Thailand PCL, you can compare the effects of market volatilities on Ribbon Communications and Internet Thailand 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 Ribbon Communications with a short position of Internet Thailand. Check out your portfolio center. Please also check ongoing floating volatility patterns of Ribbon Communications and Internet Thailand.

Diversification Opportunities for Ribbon Communications and Internet Thailand

0.7

Correlation Coefficient

Ribbon Communications  Internet Thailand

Poor diversification

The 3 months correlation between Ribbon and Internet is 0.7. Overlapping area represents the amount of risk that can be diversified away by holding Ribbon Communications and Internet Thailand PCL in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Internet Thailand PCL and Ribbon Communications 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 Ribbon Communications are associated (or correlated) with Internet Thailand. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Internet Thailand PCL has no effect on the direction of Ribbon Communications i.e., Ribbon Communications and Internet Thailand go up and down completely randomly.

Pair Corralation between Ribbon Communications and Internet Thailand

Assuming the 90 days trading horizon Ribbon Communications is expected to generate 0.52 times more return on investment than Internet Thailand. However, Ribbon Communications is 1.93 times less risky than Internet Thailand. It trades about 0.14 of its potential returns per unit of risk. Internet Thailand PCL is currently generating about -0.1 per unit of risk. If you would invest  364.00  in Ribbon Communications on September 19, 2024 and sell it today you would earn a total of  24.00  from holding Ribbon Communications or generate 6.59% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	95.65%
Values	Daily Returns

Ribbon Communications  vs.  Internet Thailand PCL

Ribbon Communications

Risk-Adjusted Performance

18 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Ribbon Communications are ranked lower than 18 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, Ribbon Communications reported solid returns over the last few months and may actually be approaching a breakup point.

Internet Thailand PCL

Risk-Adjusted Performance

12 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Internet Thailand PCL are ranked lower than 12 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain basic indicators, Internet Thailand unveiled solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Ribbon Communications and Internet Thailand

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

The idea behind Ribbon Communications and Internet Thailand PCL 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 Global Markets Map module to get a quick overview of global market snapshot using zoomable world map. Drill down to check world indexes.