Correlation Between THAI BEVERAGE and Martin Marietta

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

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

Diversification Opportunities for THAI BEVERAGE and Martin Marietta

0.16

Correlation Coefficient

THAI BEVERAGE  Martin Marietta

Average diversification

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

Pair Corralation between THAI BEVERAGE and Martin Marietta

Assuming the 90 days trading horizon THAI BEVERAGE is expected to generate 1.87 times more return on investment than Martin Marietta. However, THAI BEVERAGE is 1.87 times more volatile than Martin Marietta Materials. It trades about 0.05 of its potential returns per unit of risk. Martin Marietta Materials is currently generating about 0.05 per unit of risk. If you would invest  35.00  in THAI BEVERAGE on September 22, 2024 and sell it today you would earn a total of  2.00  from holding THAI BEVERAGE or generate 5.71% return on investment over 90 days.

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

THAI BEVERAGE  vs.  Martin Marietta Materials

THAI BEVERAGE

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in THAI BEVERAGE are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. In spite of rather uncertain basic indicators, THAI BEVERAGE may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Martin Marietta Materials

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Martin Marietta Materials are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively stable basic indicators, Martin Marietta is not utilizing all of its potentials. The current stock price uproar, may contribute to short-horizon losses for the private investors.

Pair Trading with THAI BEVERAGE and Martin Marietta

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

The idea behind THAI BEVERAGE and Martin Marietta Materials 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.

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 Portfolio Backtesting module to avoid under-diversification and over-optimization by backtesting your portfolios.