Correlation Between Thai Beverage and JD Sports

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

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

Diversification Opportunities for Thai Beverage and JD Sports

0.0

Correlation Coefficient

Thai Beverage  JD Sports

Pay attention - limited upside

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

Pair Corralation between Thai Beverage and JD Sports

Assuming the 90 days horizon Thai Beverage PCL is expected to under-perform the JD Sports. But the pink sheet apears to be less risky and, when comparing its historical volatility, Thai Beverage PCL is 2.33 times less risky than JD Sports. The pink sheet trades about -0.06 of its potential returns per unit of risk. The JD Sports Fashion is currently generating about 0.04 of returns per unit of risk over similar time horizon. If you would invest  108.00  in JD Sports Fashion on August 16, 2024 and sell it today you would earn a total of  70.00  from holding JD Sports Fashion or generate 64.81% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Flat
Strength	Insignificant
Accuracy	60.0%
Values	Daily Returns

Thai Beverage PCL  vs.  JD Sports Fashion

Thai Beverage PCL

Risk-Adjusted Performance

0 of 100

Very Weak

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

JD Sports Fashion

Risk-Adjusted Performance

10 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in JD Sports Fashion are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. Despite nearly uncertain basic indicators, JD Sports may actually be approaching a critical reversion point that can send shares even higher in December 2024.

Pair Trading with Thai Beverage and JD Sports

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

The idea behind Thai Beverage PCL and JD Sports Fashion 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 Holdings module to check your current holdings and cash postion to detemine if your portfolio needs rebalancing.