Correlation Between TMBThanachart Bank and Tipco Foods

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

By analyzing existing cross correlation between TMBThanachart Bank Public and Tipco Foods Public, you can compare the effects of market volatilities on TMBThanachart Bank and Tipco Foods 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 TMBThanachart Bank with a short position of Tipco Foods. Check out your portfolio center. Please also check ongoing floating volatility patterns of TMBThanachart Bank and Tipco Foods.

Diversification Opportunities for TMBThanachart Bank and Tipco Foods

0.08

Correlation Coefficient

TMBThanachart Bank  Tipco Foods

Significant diversification

The 3 months correlation between TMBThanachart and Tipco is 0.08. Overlapping area represents the amount of risk that can be diversified away by holding TMBThanachart Bank Public and Tipco Foods Public in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Tipco Foods Public and TMBThanachart Bank 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 TMBThanachart Bank Public are associated (or correlated) with Tipco Foods. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Tipco Foods Public has no effect on the direction of TMBThanachart Bank i.e., TMBThanachart Bank and Tipco Foods go up and down completely randomly.

Pair Corralation between TMBThanachart Bank and Tipco Foods

Assuming the 90 days trading horizon TMBThanachart Bank Public is expected to under-perform the Tipco Foods. In addition to that, TMBThanachart Bank is 2.01 times more volatile than Tipco Foods Public. It trades about -0.03 of its total potential returns per unit of risk. Tipco Foods Public is currently generating about 0.08 per unit of volatility. If you would invest  985.00  in Tipco Foods Public on September 16, 2024 and sell it today you would earn a total of  25.00  from holding Tipco Foods Public or generate 2.54% return on investment over 90 days.

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

TMBThanachart Bank Public  vs.  Tipco Foods Public

TMBThanachart Bank Public

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days TMBThanachart Bank Public has generated negative risk-adjusted returns adding no value to investors with long positions. Despite quite persistent fundamental drivers, TMBThanachart Bank is not utilizing all of its potentials. The current stock price mess, may contribute to short-term losses for the institutional investors.

Tipco Foods Public

Risk-Adjusted Performance

6 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Tipco Foods Public are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. Despite somewhat strong fundamental drivers, Tipco Foods is not utilizing all of its potentials. The latest stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with TMBThanachart Bank and Tipco Foods

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

The idea behind TMBThanachart Bank Public and Tipco Foods 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 Center module to all portfolio management and optimization tools to improve performance of your portfolios.