Correlation Between Home Product and MK Restaurant
Can any of the company-specific risk be diversified away by investing in both Home Product and MK Restaurant 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 Home Product and MK Restaurant into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Home Product Center and MK Restaurant Group, you can compare the effects of market volatilities on Home Product and MK Restaurant 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 Home Product with a short position of MK Restaurant. Check out your portfolio center. Please also check ongoing floating volatility patterns of Home Product and MK Restaurant.
Diversification Opportunities for Home Product and MK Restaurant
0.8 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Home and MK Restaurant is 0.8. Overlapping area represents the amount of risk that can be diversified away by holding Home Product Center and MK Restaurant Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on MK Restaurant Group and Home Product 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 Home Product Center are associated (or correlated) with MK Restaurant. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of MK Restaurant Group has no effect on the direction of Home Product i.e., Home Product and MK Restaurant go up and down completely randomly.
Pair Corralation between Home Product and MK Restaurant
Assuming the 90 days trading horizon Home Product Center is expected to generate 1.12 times more return on investment than MK Restaurant. However, Home Product is 1.12 times more volatile than MK Restaurant Group. It trades about -0.07 of its potential returns per unit of risk. MK Restaurant Group is currently generating about -0.52 per unit of risk. If you would invest 945.00 in Home Product Center on October 24, 2024 and sell it today you would lose (40.00) from holding Home Product Center or give up 4.23% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Home Product Center vs. MK Restaurant Group
Performance |
| Timeline |
| Home Product Center |
| MK Restaurant Group |
Home Product and MK Restaurant Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Home Product and MK Restaurant
The main advantage of trading using opposite Home Product and MK Restaurant positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Home Product position performs unexpectedly, MK Restaurant 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 MK Restaurant will offset losses from the drop in MK Restaurant's long position.| Home Product vs. CP ALL Public | Home Product vs. Bangkok Dusit Medical | Home Product vs. Central Pattana Public | Home Product vs. Advanced Info Service |
| MK Restaurant vs. Minor International Public | MK Restaurant vs. Home Product Center | MK Restaurant vs. CP ALL Public | MK Restaurant 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 Earnings Calls module to check upcoming earnings announcements updated hourly across public exchanges.
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