Correlation Between Thai Beverage and Dine Brands

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

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

Diversification Opportunities for Thai Beverage and Dine Brands

0.0

Correlation Coefficient

Thai Beverage  Dine Brands

Pay attention - limited upside

The 3 months correlation between Thai and Dine is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding Thai Beverage PCL and Dine Brands Global in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Dine Brands Global 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 PCL are associated (or correlated) with Dine Brands. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Dine Brands Global has no effect on the direction of Thai Beverage i.e., Thai Beverage and Dine Brands go up and down completely randomly.

Pair Corralation between Thai Beverage and Dine Brands

Assuming the 90 days horizon Thai Beverage PCL is expected to under-perform the Dine Brands. But the pink sheet apears to be less risky and, when comparing its historical volatility, Thai Beverage PCL is 2.56 times less risky than Dine Brands. The pink sheet trades about -0.09 of its potential returns per unit of risk. The Dine Brands Global is currently generating about -0.02 of returns per unit of risk over similar time horizon. If you would invest  3,620  in Dine Brands Global on September 15, 2024 and sell it today you would lose (504.00) from holding Dine Brands Global or give up 13.92% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Flat
Strength	Insignificant
Accuracy	99.21%
Values	Daily Returns

Thai Beverage PCL  vs.  Dine Brands Global

Thai Beverage PCL

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Thai Beverage PCL has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly strong basic indicators, Thai Beverage is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Dine Brands Global

Risk-Adjusted Performance

3 of 100

Insignificant

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

Pair Trading with Thai Beverage and Dine Brands

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

The idea behind Thai Beverage PCL and Dine Brands Global 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 Economic Indicators module to top statistical indicators that provide insights into how an economy is performing.