Correlation Between TH International and Marstons PLC

Can any of the company-specific risk be diversified away by investing in both TH International and Marstons PLC 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 TH International and Marstons PLC into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between TH International Limited and Marstons PLC, you can compare the effects of market volatilities on TH International and Marstons PLC 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 TH International with a short position of Marstons PLC. Check out your portfolio center. Please also check ongoing floating volatility patterns of TH International and Marstons PLC.

Diversification Opportunities for TH International and Marstons PLC

0.0

Correlation Coefficient

TH International  Marstons PLC

Pay attention - limited upside

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

Pair Corralation between TH International and Marstons PLC

Given the investment horizon of 90 days TH International Limited is expected to under-perform the Marstons PLC. In addition to that, TH International is 1.25 times more volatile than Marstons PLC. It trades about -0.04 of its total potential returns per unit of risk. Marstons PLC is currently generating about 0.02 per unit of volatility. If you would invest  399.00  in Marstons PLC on September 14, 2024 and sell it today you would earn a total of  29.00  from holding Marstons PLC or generate 7.27% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Flat
Strength	Insignificant
Accuracy	99.8%
Values	Daily Returns

TH International Limited  vs.  Marstons PLC

TH International

Risk-Adjusted Performance

2 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in TH International Limited are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. Despite fairly weak fundamental indicators, TH International may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Marstons PLC

Risk-Adjusted Performance

0 of 100

Very Weak

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

Pair Trading with TH International and Marstons PLC

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

The idea behind TH International Limited and Marstons PLC 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 Global Correlations module to find global opportunities by holding instruments from different markets.