Correlation Between Italian Thai and Peoples Garment

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

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

Diversification Opportunities for Italian Thai and Peoples Garment

0.3

Correlation Coefficient

Italian Thai  Peoples Garment

Weak diversification

The 3 months correlation between Italian and Peoples is 0.3. Overlapping area represents the amount of risk that can be diversified away by holding Italian Thai Development Publi and Peoples Garment Public in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Peoples Garment Public and Italian Thai 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 Italian Thai Development Public are associated (or correlated) with Peoples Garment. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Peoples Garment Public has no effect on the direction of Italian Thai i.e., Italian Thai and Peoples Garment go up and down completely randomly.

Pair Corralation between Italian Thai and Peoples Garment

Assuming the 90 days trading horizon Italian Thai is expected to generate 1.16 times less return on investment than Peoples Garment. In addition to that, Italian Thai is 1.0 times more volatile than Peoples Garment Public. It trades about 0.04 of its total potential returns per unit of risk. Peoples Garment Public is currently generating about 0.04 per unit of volatility. If you would invest  702.00  in Peoples Garment Public on September 14, 2024 and sell it today you would earn a total of  193.00  from holding Peoples Garment Public or generate 27.49% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	99.79%
Values	Daily Returns

Italian Thai Development Publi  vs.  Peoples Garment Public

Italian Thai Develop

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Italian Thai Development Public has generated negative risk-adjusted returns adding no value to investors with long positions. Despite conflicting performance in the last few months, the Stock's fundamental indicators remain quite persistent which may send shares a bit higher in January 2025. The latest mess may also be a sign of long-standing up-swing for the company institutional investors.

Peoples Garment Public

Risk-Adjusted Performance

0 of 100

Very Weak

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

Pair Trading with Italian Thai and Peoples Garment

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

The idea behind Italian Thai Development Public and Peoples Garment 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 Pair Correlation module to compare performance and examine fundamental relationship between any two equity instruments.