Correlation Between THAI BEVERAGE and DATANG INTL

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

By analyzing existing cross correlation between THAI BEVERAGE and DATANG INTL POW, you can compare the effects of market volatilities on THAI BEVERAGE and DATANG INTL 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 DATANG INTL. Check out your portfolio center. Please also check ongoing floating volatility patterns of THAI BEVERAGE and DATANG INTL.

Diversification Opportunities for THAI BEVERAGE and DATANG INTL

-0.16

Correlation Coefficient

THAI BEVERAGE  DATANG INTL

Good diversification

The 3 months correlation between THAI and DATANG is -0.16. Overlapping area represents the amount of risk that can be diversified away by holding THAI BEVERAGE and DATANG INTL POW in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on DATANG INTL POW 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 DATANG INTL. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of DATANG INTL POW has no effect on the direction of THAI BEVERAGE i.e., THAI BEVERAGE and DATANG INTL go up and down completely randomly.

Pair Corralation between THAI BEVERAGE and DATANG INTL

Assuming the 90 days trading horizon THAI BEVERAGE is expected to generate 0.69 times more return on investment than DATANG INTL. However, THAI BEVERAGE is 1.44 times less risky than DATANG INTL. It trades about 0.03 of its potential returns per unit of risk. DATANG INTL POW is currently generating about -0.01 per unit of risk. If you would invest  36.00  in THAI BEVERAGE on September 28, 2024 and sell it today you would earn a total of  1.00  from holding THAI BEVERAGE or generate 2.78% return on investment over 90 days.

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

THAI BEVERAGE  vs.  DATANG INTL POW

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.

DATANG INTL POW

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days DATANG INTL POW has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable basic indicators, DATANG INTL is not utilizing all of its potentials. The latest stock price uproar, may contribute to short-horizon losses for the private investors.

Pair Trading with THAI BEVERAGE and DATANG INTL

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

The idea behind THAI BEVERAGE and DATANG INTL POW 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 Bond Analysis module to evaluate and analyze corporate bonds as a potential investment for your portfolios..