Correlation Between Thai Beverage and KGHM Polska

Can any of the company-specific risk be diversified away by investing in both Thai Beverage and KGHM Polska 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 KGHM Polska into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Thai Beverage Public and KGHM Polska Miedz, you can compare the effects of market volatilities on Thai Beverage and KGHM Polska 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 KGHM Polska. Check out your portfolio center. Please also check ongoing floating volatility patterns of Thai Beverage and KGHM Polska.

Diversification Opportunities for Thai Beverage and KGHM Polska

-0.35

Correlation Coefficient

Thai Beverage  KGHM Polska

Very good diversification

The 3 months correlation between Thai and KGHM is -0.35. Overlapping area represents the amount of risk that can be diversified away by holding Thai Beverage Public and KGHM Polska Miedz in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on KGHM Polska Miedz 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 Public are associated (or correlated) with KGHM Polska. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of KGHM Polska Miedz has no effect on the direction of Thai Beverage i.e., Thai Beverage and KGHM Polska go up and down completely randomly.

Pair Corralation between Thai Beverage and KGHM Polska

Assuming the 90 days horizon Thai Beverage Public is expected to generate 2.2 times more return on investment than KGHM Polska. However, Thai Beverage is 2.2 times more volatile than KGHM Polska Miedz. It trades about 0.07 of its potential returns per unit of risk. KGHM Polska Miedz is currently generating about 0.03 per unit of risk. If you would invest  19.00  in Thai Beverage Public on September 28, 2024 and sell it today you would earn a total of  18.00  from holding Thai Beverage Public or generate 94.74% return on investment over 90 days.

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

Thai Beverage Public  vs.  KGHM Polska Miedz

Thai Beverage Public

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Thai Beverage Public are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. Despite nearly stable basic indicators, Thai Beverage is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

KGHM Polska Miedz

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days KGHM Polska Miedz has generated negative risk-adjusted returns adding no value to investors with long positions. Despite fragile performance in the last few months, the Stock's technical indicators remain nearly stable which may send shares a bit higher in January 2025. The current disturbance may also be a sign of long-run up-swing for the company stockholders.

Pair Trading with Thai Beverage and KGHM Polska

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

The idea behind Thai Beverage Public and KGHM Polska Miedz 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 Equity Search module to search for actively traded equities including funds and ETFs from over 30 global markets.