Correlation Between THAI BEVERAGE and Siemens Aktiengesellscha

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

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

Diversification Opportunities for THAI BEVERAGE and Siemens Aktiengesellscha

0.22

Correlation Coefficient

THAI BEVERAGE  Siemens Aktiengesellscha

Modest diversification

The 3 months correlation between THAI and Siemens is 0.22. Overlapping area represents the amount of risk that can be diversified away by holding THAI BEVERAGE and Siemens Aktiengesellschaft in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Siemens Aktiengesellscha 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 Siemens Aktiengesellscha. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Siemens Aktiengesellscha has no effect on the direction of THAI BEVERAGE i.e., THAI BEVERAGE and Siemens Aktiengesellscha go up and down completely randomly.

Pair Corralation between THAI BEVERAGE and Siemens Aktiengesellscha

Assuming the 90 days trading horizon THAI BEVERAGE is expected to generate 1.01 times less return on investment than Siemens Aktiengesellscha. In addition to that, THAI BEVERAGE is 1.52 times more volatile than Siemens Aktiengesellschaft. It trades about 0.08 of its total potential returns per unit of risk. Siemens Aktiengesellschaft is currently generating about 0.12 per unit of volatility. If you would invest  16,672  in Siemens Aktiengesellschaft on September 4, 2024 and sell it today you would earn a total of  2,140  from holding Siemens Aktiengesellschaft or generate 12.84% 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.  Siemens Aktiengesellschaft

THAI BEVERAGE

Risk-Adjusted Performance

6 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in THAI BEVERAGE are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. In spite of rather unsteady basic indicators, THAI BEVERAGE may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Siemens Aktiengesellscha

Risk-Adjusted Performance

9 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Siemens Aktiengesellschaft are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively fragile technical and fundamental indicators, Siemens Aktiengesellscha may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with THAI BEVERAGE and Siemens Aktiengesellscha

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

The idea behind THAI BEVERAGE and Siemens Aktiengesellschaft 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 Options Analysis module to analyze and evaluate options and option chains as a potential hedge for your portfolios.