Correlation Between Thai Beverage and Vodka Brands

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

By analyzing existing cross correlation between Thai Beverage Public and Vodka Brands Corp, you can compare the effects of market volatilities on Thai Beverage and Vodka Brands 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 Vodka Brands. Check out your portfolio center. Please also check ongoing floating volatility patterns of Thai Beverage and Vodka Brands.

Diversification Opportunities for Thai Beverage and Vodka Brands

-0.28

Correlation Coefficient

Thai Beverage  Vodka Brands

Very good diversification

The 3 months correlation between Thai and Vodka is -0.28. Overlapping area represents the amount of risk that can be diversified away by holding Thai Beverage Public and Vodka Brands Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Vodka Brands Corp 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 Public are associated (or correlated) with Vodka Brands. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Vodka Brands Corp has no effect on the direction of Thai Beverage i.e., Thai Beverage and Vodka Brands go up and down completely randomly.

Pair Corralation between Thai Beverage and Vodka Brands

Assuming the 90 days horizon Thai Beverage Public is expected to under-perform the Vodka Brands. In addition to that, Thai Beverage is 1.26 times more volatile than Vodka Brands Corp. It trades about -0.1 of its total potential returns per unit of risk. Vodka Brands Corp is currently generating about 0.09 per unit of volatility. If you would invest  94.00  in Vodka Brands Corp on August 14, 2024 and sell it today you would earn a total of  6.00  from holding Vodka Brands Corp or generate 6.38% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	95.45%
Values	Daily Returns

Thai Beverage Public  vs.  Vodka Brands Corp

Thai Beverage Public

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Thai Beverage Public are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. Despite nearly unfluctuating basic indicators, Thai Beverage reported solid returns over the last few months and may actually be approaching a breakup point.

Vodka Brands Corp

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Vodka Brands Corp has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong forward-looking signals, Vodka Brands is not utilizing all of its potentials. The recent stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Thai Beverage and Vodka Brands

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

The idea behind Thai Beverage Public and Vodka Brands Corp 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 Correlation Analysis module to reduce portfolio risk simply by holding instruments which are not perfectly correlated.