Correlation Between Thai Beverage and MCKESSON

Can any of the company-specific risk be diversified away by investing in both Thai Beverage and MCKESSON 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 MCKESSON 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 MCKESSON P NEW, you can compare the effects of market volatilities on Thai Beverage and MCKESSON 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 MCKESSON. Check out your portfolio center. Please also check ongoing floating volatility patterns of Thai Beverage and MCKESSON.

Diversification Opportunities for Thai Beverage and MCKESSON

0.0

Correlation Coefficient

Thai Beverage  MCKESSON

Pay attention - limited upside

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

Pair Corralation between Thai Beverage and MCKESSON

Assuming the 90 days horizon Thai Beverage PCL is expected to under-perform the MCKESSON. In addition to that, Thai Beverage is 2.5 times more volatile than MCKESSON P NEW. It trades about -0.06 of its total potential returns per unit of risk. MCKESSON P NEW is currently generating about 0.01 per unit of volatility. If you would invest  9,512  in MCKESSON P NEW on September 20, 2024 and sell it today you would earn a total of  225.00  from holding MCKESSON P NEW or generate 2.37% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Flat
Strength	Insignificant
Accuracy	74.87%
Values	Daily Returns

Thai Beverage PCL  vs.  MCKESSON P NEW

Thai Beverage PCL

Risk-Adjusted Performance

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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.

MCKESSON P NEW

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days MCKESSON P NEW has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong basic indicators, MCKESSON is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Thai Beverage and MCKESSON

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

The idea behind Thai Beverage PCL and MCKESSON P NEW 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 Fundamentals Comparison module to compare fundamentals across multiple equities to find investing opportunities.