Correlation Between Thai Beverage and Citic Telecom

Can any of the company-specific risk be diversified away by investing in both Thai Beverage and Citic Telecom 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 Citic Telecom 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 Citic Telecom International, you can compare the effects of market volatilities on Thai Beverage and Citic Telecom 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 Citic Telecom. Check out your portfolio center. Please also check ongoing floating volatility patterns of Thai Beverage and Citic Telecom.

Diversification Opportunities for Thai Beverage and Citic Telecom

0.18

Correlation Coefficient

Thai Beverage  Citic Telecom

Average diversification

The 3 months correlation between Thai and Citic is 0.18. Overlapping area represents the amount of risk that can be diversified away by holding Thai Beverage Public and Citic Telecom International in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Citic Telecom Intern 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 Citic Telecom. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Citic Telecom Intern has no effect on the direction of Thai Beverage i.e., Thai Beverage and Citic Telecom go up and down completely randomly.

Pair Corralation between Thai Beverage and Citic Telecom

Assuming the 90 days horizon Thai Beverage Public is expected to generate 1.11 times more return on investment than Citic Telecom. However, Thai Beverage is 1.11 times more volatile than Citic Telecom International. It trades about 0.25 of its potential returns per unit of risk. Citic Telecom International is currently generating about 0.01 per unit of risk. If you would invest  34.00  in Thai Beverage Public on September 2, 2024 and sell it today you would earn a total of  5.00  from holding Thai Beverage Public or generate 14.71% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	100.0%
Values	Daily Returns

Thai Beverage Public  vs.  Citic Telecom International

Thai Beverage Public

Risk-Adjusted Performance

5 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Thai Beverage Public are ranked lower than 5 (%) 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.

Citic Telecom Intern

Risk-Adjusted Performance

8 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Citic Telecom International are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively fragile basic indicators, Citic Telecom unveiled solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Thai Beverage and Citic Telecom

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

The idea behind Thai Beverage Public and Citic Telecom International 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 Bonds Directory module to find actively traded corporate debentures issued by US companies.