Correlation Between Thai Life and Symphony Communication

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

By analyzing existing cross correlation between Thai Life Insurance and Symphony Communication Public, you can compare the effects of market volatilities on Thai Life and Symphony Communication 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 Life with a short position of Symphony Communication. Check out your portfolio center. Please also check ongoing floating volatility patterns of Thai Life and Symphony Communication.

Diversification Opportunities for Thai Life and Symphony Communication

0.6

Correlation Coefficient

Thai Life  Symphony Communication

Poor diversification

The 3 months correlation between Thai and Symphony is 0.6. Overlapping area represents the amount of risk that can be diversified away by holding Thai Life Insurance and Symphony Communication Public in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Symphony Communication and Thai Life 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 Life Insurance are associated (or correlated) with Symphony Communication. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Symphony Communication has no effect on the direction of Thai Life i.e., Thai Life and Symphony Communication go up and down completely randomly.

Pair Corralation between Thai Life and Symphony Communication

Assuming the 90 days trading horizon Thai Life Insurance is expected to generate 0.89 times more return on investment than Symphony Communication. However, Thai Life Insurance is 1.12 times less risky than Symphony Communication. It trades about 0.12 of its potential returns per unit of risk. Symphony Communication Public is currently generating about 0.06 per unit of risk. If you would invest  900.00  in Thai Life Insurance on September 16, 2024 and sell it today you would earn a total of  170.00  from holding Thai Life Insurance or generate 18.89% return on investment over 90 days.

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

Thai Life Insurance  vs.  Symphony Communication Public

Thai Life Insurance

Risk-Adjusted Performance

9 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Thai Life Insurance are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. Despite quite weak forward indicators, Thai Life disclosed solid returns over the last few months and may actually be approaching a breakup point.

Symphony Communication

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Symphony Communication Public are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. Despite quite weak forward-looking signals, Symphony Communication may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with Thai Life and Symphony Communication

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

The idea behind Thai Life Insurance and Symphony Communication Public 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.

Check out your portfolio center.

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 Portfolio Dashboard module to portfolio dashboard that provides centralized access to all your investments.