Correlation Between CP ALL and Taokaenoi Food
Can any of the company-specific risk be diversified away by investing in both CP ALL and Taokaenoi Food 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 Taokaenoi Food 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 Taokaenoi Food Marketing, you can compare the effects of market volatilities on CP ALL and Taokaenoi Food 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 Taokaenoi Food. Check out your portfolio center. Please also check ongoing floating volatility patterns of CP ALL and Taokaenoi Food.
Diversification Opportunities for CP ALL and Taokaenoi Food
0.45 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between CPALL and Taokaenoi is 0.45. Overlapping area represents the amount of risk that can be diversified away by holding CP ALL Public and Taokaenoi Food Marketing in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Taokaenoi Food Marketing 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 Taokaenoi Food. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Taokaenoi Food Marketing has no effect on the direction of CP ALL i.e., CP ALL and Taokaenoi Food go up and down completely randomly.
Pair Corralation between CP ALL and Taokaenoi Food
Assuming the 90 days trading horizon CP ALL is expected to generate 38.43 times less return on investment than Taokaenoi Food. But when comparing it to its historical volatility, CP ALL Public is 49.07 times less risky than Taokaenoi Food. It trades about 0.07 of its potential returns per unit of risk. Taokaenoi Food Marketing is currently generating about 0.06 of returns per unit of risk over similar time horizon. If you would invest 906.00 in Taokaenoi Food Marketing on August 26, 2024 and sell it today you would lose (51.00) from holding Taokaenoi Food Marketing or give up 5.63% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
CP ALL Public vs. Taokaenoi Food Marketing
Performance |
| Timeline |
| CP ALL Public |
| Taokaenoi Food Marketing |
CP ALL and Taokaenoi Food Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with CP ALL and Taokaenoi Food
The main advantage of trading using opposite CP ALL and Taokaenoi Food positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if CP ALL position performs unexpectedly, Taokaenoi Food 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 Taokaenoi Food will offset losses from the drop in Taokaenoi Food's long position.The idea behind CP ALL Public and Taokaenoi Food Marketing 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.| Taokaenoi Food vs. CP ALL Public | Taokaenoi Food vs. Carabao Group Public | Taokaenoi Food vs. Thai Union Group | Taokaenoi Food vs. Minor International 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 Price Transformation module to use Price Transformation models to analyze the depth of different equity instruments across global markets.
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