Correlation Between LANDSEA HOMES and Thai Beverage

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

By analyzing existing cross correlation between LANDSEA HOMES P and Thai Beverage Public, you can compare the effects of market volatilities on LANDSEA HOMES and Thai Beverage 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 LANDSEA HOMES with a short position of Thai Beverage. Check out your portfolio center. Please also check ongoing floating volatility patterns of LANDSEA HOMES and Thai Beverage.

Diversification Opportunities for LANDSEA HOMES and Thai Beverage

-0.62

Correlation Coefficient

LANDSEA HOMES  Thai Beverage

Excellent diversification

The 1 month correlation between LANDSEA and Thai is -0.62. Overlapping area represents the amount of risk that can be diversified away by holding LANDSEA HOMES P and Thai Beverage Public in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Thai Beverage Public and LANDSEA HOMES 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 LANDSEA HOMES P are associated (or correlated) with Thai Beverage. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Thai Beverage Public has no effect on the direction of LANDSEA HOMES i.e., LANDSEA HOMES and Thai Beverage go up and down completely randomly.

Pair Corralation between LANDSEA HOMES and Thai Beverage

Assuming the 90 days horizon LANDSEA HOMES P is expected to under-perform the Thai Beverage. But the stock apears to be less risky and, when comparing its historical volatility, LANDSEA HOMES P is 4.95 times less risky than Thai Beverage. The stock trades about -0.24 of its potential returns per unit of risk. The Thai Beverage Public is currently generating about 0.2 of returns per unit of risk over similar time horizon. If you would invest  20.00  in Thai Beverage Public on March 5, 2024 and sell it today you would earn a total of  13.00  from holding Thai Beverage Public or generate 65.0% return on investment over 90 days.

Time Period	1 Month [change]
Direction	Moves Against
Strength	Weak
Accuracy	100.0%
Values	Daily Returns

LANDSEA HOMES P  vs.  Thai Beverage Public

LANDSEA HOMES P

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days LANDSEA HOMES P 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.

Thai Beverage Public

Risk-Adjusted Performance

15 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Thai Beverage Public are ranked lower than 15 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, Thai Beverage reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with LANDSEA HOMES and Thai Beverage

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

The idea behind LANDSEA HOMES P and Thai Beverage 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.

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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 Stock Tickers module to use high-impact, comprehensive, and customizable stock tickers that can be easily integrated to any websites.