Correlation Between THAI BEVERAGE and Gaztransport Technigaz

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

By analyzing existing cross correlation between THAI BEVERAGE and Gaztransport Technigaz SA, you can compare the effects of market volatilities on THAI BEVERAGE and Gaztransport Technigaz 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 Gaztransport Technigaz. Check out your portfolio center. Please also check ongoing floating volatility patterns of THAI BEVERAGE and Gaztransport Technigaz.

Diversification Opportunities for THAI BEVERAGE and Gaztransport Technigaz

-0.4

Correlation Coefficient

THAI BEVERAGE  Gaztransport Technigaz

Very good diversification

The 3 months correlation between THAI and Gaztransport is -0.4. Overlapping area represents the amount of risk that can be diversified away by holding THAI BEVERAGE and Gaztransport Technigaz SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Gaztransport Technigaz 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 are associated (or correlated) with Gaztransport Technigaz. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Gaztransport Technigaz has no effect on the direction of THAI BEVERAGE i.e., THAI BEVERAGE and Gaztransport Technigaz go up and down completely randomly.

Pair Corralation between THAI BEVERAGE and Gaztransport Technigaz

Assuming the 90 days trading horizon THAI BEVERAGE is expected to generate 32.39 times more return on investment than Gaztransport Technigaz. However, THAI BEVERAGE is 32.39 times more volatile than Gaztransport Technigaz SA. It trades about 0.21 of its potential returns per unit of risk. Gaztransport Technigaz SA is currently generating about 0.01 per unit of risk. If you would invest  14.00  in THAI BEVERAGE on March 19, 2024 and sell it today you would earn a total of  18.00  from holding THAI BEVERAGE or generate 128.57% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	100.0%
Values	Daily Returns

THAI BEVERAGE  vs.  Gaztransport Technigaz SA

THAI BEVERAGE

Risk-Adjusted Performance

11 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in THAI BEVERAGE are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. In spite of rather uncertain basic indicators, THAI BEVERAGE exhibited solid returns over the last few months and may actually be approaching a breakup point.

Gaztransport Technigaz

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Gaztransport Technigaz SA has generated negative risk-adjusted returns adding no value to investors with long positions. Despite fragile performance in the last few months, the Stock's basic indicators remain nearly stable which may send shares a bit higher in July 2024. The current disturbance may also be a sign of long-run up-swing for the company stockholders.

Pair Trading with THAI BEVERAGE and Gaztransport Technigaz

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

The idea behind THAI BEVERAGE and Gaztransport Technigaz SA 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 ETF Categories module to list of ETF categories grouped based on various criteria, such as the investment strategy or type of investments.