Correlation Between Central Pattana and Thai Vegetable
Can any of the company-specific risk be diversified away by investing in both Central Pattana and Thai Vegetable 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 Central Pattana and Thai Vegetable into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Central Pattana Public and Thai Vegetable Oil, you can compare the effects of market volatilities on Central Pattana and Thai Vegetable 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 Central Pattana with a short position of Thai Vegetable. Check out your portfolio center. Please also check ongoing floating volatility patterns of Central Pattana and Thai Vegetable.
Diversification Opportunities for Central Pattana and Thai Vegetable
0.69 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Central and Thai is 0.69. Overlapping area represents the amount of risk that can be diversified away by holding Central Pattana Public and Thai Vegetable Oil in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Thai Vegetable Oil and Central Pattana 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 Central Pattana Public are associated (or correlated) with Thai Vegetable. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Thai Vegetable Oil has no effect on the direction of Central Pattana i.e., Central Pattana and Thai Vegetable go up and down completely randomly.
Pair Corralation between Central Pattana and Thai Vegetable
Assuming the 90 days trading horizon Central Pattana Public is expected to generate 1.56 times more return on investment than Thai Vegetable. However, Central Pattana is 1.56 times more volatile than Thai Vegetable Oil. It trades about -0.13 of its potential returns per unit of risk. Thai Vegetable Oil is currently generating about -0.26 per unit of risk. If you would invest 6,500 in Central Pattana Public on August 26, 2024 and sell it today you would lose (275.00) from holding Central Pattana Public or give up 4.23% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Central Pattana Public vs. Thai Vegetable Oil
Performance |
| Timeline |
| Central Pattana Public |
| Thai Vegetable Oil |
Central Pattana and Thai Vegetable Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Central Pattana and Thai Vegetable
The main advantage of trading using opposite Central Pattana and Thai Vegetable positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Central Pattana position performs unexpectedly, Thai Vegetable 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 Vegetable will offset losses from the drop in Thai Vegetable's long position.| Central Pattana vs. CP ALL Public | Central Pattana vs. Bangkok Dusit Medical | Central Pattana vs. Airports of Thailand | Central Pattana vs. Advanced Info Service |
| Thai Vegetable vs. Thai Union Group | Thai Vegetable vs. Minor International Public | Thai Vegetable vs. Central Pattana 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 Portfolio Analyzer module to portfolio analysis module that provides access to portfolio diagnostics and optimization engine.
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