Correlation Between THAI BEVERAGE and Uni President

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

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

Diversification Opportunities for THAI BEVERAGE and Uni President

0.33

Correlation Coefficient

THAI BEVERAGE  Uni President

Weak diversification

The 3 months correlation between THAI and Uni is 0.33. Overlapping area represents the amount of risk that can be diversified away by holding THAI BEVERAGE and Uni President China Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Uni President China and THAI BEVERAGE 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 BEVERAGE are associated (or correlated) with Uni President. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Uni President China has no effect on the direction of THAI BEVERAGE i.e., THAI BEVERAGE and Uni President go up and down completely randomly.

Pair Corralation between THAI BEVERAGE and Uni President

Assuming the 90 days trading horizon THAI BEVERAGE is expected to generate 6.61 times less return on investment than Uni President. But when comparing it to its historical volatility, THAI BEVERAGE is 2.44 times less risky than Uni President. It trades about 0.03 of its potential returns per unit of risk. Uni President China Holdings is currently generating about 0.08 of returns per unit of risk over similar time horizon. If you would invest  74.00  in Uni President China Holdings on September 30, 2024 and sell it today you would earn a total of  16.00  from holding Uni President China Holdings or generate 21.62% return on investment over 90 days.

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

THAI BEVERAGE  vs.  Uni President China Holdings

THAI BEVERAGE

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in THAI BEVERAGE are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. In spite of rather sound basic indicators, THAI BEVERAGE is not utilizing all of its potentials. The newest stock price tumult, may contribute to shorter-term losses for the shareholders.

Uni President China

Risk-Adjusted Performance

6 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Uni President China Holdings are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, Uni President reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with THAI BEVERAGE and Uni President

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

The idea behind THAI BEVERAGE and Uni President China Holdings 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.