Correlation Between CP ALL and Tropical Canning
Can any of the company-specific risk be diversified away by investing in both CP ALL and Tropical Canning 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 CP ALL and Tropical Canning into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between CP ALL Public and Tropical Canning Public, you can compare the effects of market volatilities on CP ALL and Tropical Canning 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 CP ALL with a short position of Tropical Canning. Check out your portfolio center. Please also check ongoing floating volatility patterns of CP ALL and Tropical Canning.
Diversification Opportunities for CP ALL and Tropical Canning
0.33 | Correlation Coefficient |
Weak diversification
The 3 months correlation between CPALL and Tropical is 0.33. Overlapping area represents the amount of risk that can be diversified away by holding CP ALL Public and Tropical Canning Public in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Tropical Canning Public and CP ALL 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 CP ALL Public are associated (or correlated) with Tropical Canning. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Tropical Canning Public has no effect on the direction of CP ALL i.e., CP ALL and Tropical Canning go up and down completely randomly.
Pair Corralation between CP ALL and Tropical Canning
Assuming the 90 days trading horizon CP ALL is expected to generate 320.88 times less return on investment than Tropical Canning. But when comparing it to its historical volatility, CP ALL Public is 34.89 times less risky than Tropical Canning. It trades about 0.0 of its potential returns per unit of risk. Tropical Canning Public is currently generating about 0.04 of returns per unit of risk over similar time horizon. If you would invest 1,167 in Tropical Canning Public on August 30, 2024 and sell it today you would lose (482.00) from holding Tropical Canning Public or give up 41.3% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
CP ALL Public vs. Tropical Canning Public
Performance |
| Timeline |
| CP ALL Public |
| Tropical Canning Public |
CP ALL and Tropical Canning Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with CP ALL and Tropical Canning
The main advantage of trading using opposite CP ALL and Tropical Canning positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if CP ALL position performs unexpectedly, Tropical Canning 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 Tropical Canning will offset losses from the drop in Tropical Canning's long position.| CP ALL vs. Airports of Thailand | CP ALL vs. PTT Public | CP ALL vs. Bangkok Dusit Medical | CP ALL vs. Kasikornbank Public |
| Tropical Canning vs. Thai Vegetable Oil | Tropical Canning vs. Tipco Foods Public | Tropical Canning vs. Haad Thip Public | Tropical Canning vs. SP Syndicate Public |
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 Performance Analysis module to check effects of mean-variance optimization against your current asset allocation.
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