Correlation Between Thai Packaging and Thai Coating

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

By analyzing existing cross correlation between Thai Packaging Printing and Thai Coating Industrial, you can compare the effects of market volatilities on Thai Packaging and Thai Coating 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 Packaging with a short position of Thai Coating. Check out your portfolio center. Please also check ongoing floating volatility patterns of Thai Packaging and Thai Coating.

Diversification Opportunities for Thai Packaging and Thai Coating

-0.1

Correlation Coefficient

Thai Packaging  Thai Coating

Good diversification

The 3 months correlation between Thai and Thai is -0.1. Overlapping area represents the amount of risk that can be diversified away by holding Thai Packaging Printing and Thai Coating Industrial in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Thai Coating Industrial and Thai Packaging 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 Packaging Printing are associated (or correlated) with Thai Coating. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Thai Coating Industrial has no effect on the direction of Thai Packaging i.e., Thai Packaging and Thai Coating go up and down completely randomly.

Pair Corralation between Thai Packaging and Thai Coating

Assuming the 90 days trading horizon Thai Packaging Printing is expected to generate 25.79 times more return on investment than Thai Coating. However, Thai Packaging is 25.79 times more volatile than Thai Coating Industrial. It trades about 0.11 of its potential returns per unit of risk. Thai Coating Industrial is currently generating about 0.03 per unit of risk. If you would invest  1,330  in Thai Packaging Printing on September 15, 2024 and sell it today you would lose (90.00) from holding Thai Packaging Printing or give up 6.77% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	98.39%
Values	Daily Returns

Thai Packaging Printing  vs.  Thai Coating Industrial

Thai Packaging Printing

Risk-Adjusted Performance

8 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Thai Packaging Printing are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. Despite quite conflicting basic indicators, Thai Packaging disclosed solid returns over the last few months and may actually be approaching a breakup point.

Thai Coating Industrial

Risk-Adjusted Performance

2 of 100

Weak

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

Pair Trading with Thai Packaging and Thai Coating

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

The idea behind Thai Packaging Printing and Thai Coating Industrial 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 Balance Of Power module to check stock momentum by analyzing Balance Of Power indicator and other technical ratios.