Correlation Between Haad Thip and President Bakery
Can any of the company-specific risk be diversified away by investing in both Haad Thip and President Bakery 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 Haad Thip and President Bakery into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Haad Thip Public and President Bakery Public, you can compare the effects of market volatilities on Haad Thip and President Bakery 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 Haad Thip with a short position of President Bakery. Check out your portfolio center. Please also check ongoing floating volatility patterns of Haad Thip and President Bakery.
Diversification Opportunities for Haad Thip and President Bakery
0.46 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Haad and President is 0.46. Overlapping area represents the amount of risk that can be diversified away by holding Haad Thip Public and President Bakery Public in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on President Bakery Public and Haad Thip 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 Haad Thip Public are associated (or correlated) with President Bakery. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of President Bakery Public has no effect on the direction of Haad Thip i.e., Haad Thip and President Bakery go up and down completely randomly.
Pair Corralation between Haad Thip and President Bakery
Assuming the 90 days trading horizon Haad Thip Public is expected to generate 1.05 times more return on investment than President Bakery. However, Haad Thip is 1.05 times more volatile than President Bakery Public. It trades about 0.07 of its potential returns per unit of risk. President Bakery Public is currently generating about -0.3 per unit of risk. If you would invest 1,600 in Haad Thip Public on November 18, 2024 and sell it today you would earn a total of 20.00 from holding Haad Thip Public or generate 1.25% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Haad Thip Public vs. President Bakery Public
Performance |
| Timeline |
| Haad Thip Public |
| President Bakery Public |
Haad Thip and President Bakery Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Haad Thip and President Bakery
The main advantage of trading using opposite Haad Thip and President Bakery positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Haad Thip position performs unexpectedly, President Bakery 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 President Bakery will offset losses from the drop in President Bakery's long position.| Haad Thip vs. Charoen Pokphand Foods | Haad Thip vs. Carabao Group Public | Haad Thip vs. Home Product Center | Haad Thip vs. Ichitan Group Public |
| President Bakery vs. MK Restaurant Group | President Bakery vs. Haad Thip Public | President Bakery vs. Thai President Foods | President Bakery 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 Correlation Analysis module to reduce portfolio risk simply by holding instruments which are not perfectly correlated.
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