Correlation Between Indorama Ventures and Khon Kaen
Can any of the company-specific risk be diversified away by investing in both Indorama Ventures and Khon Kaen 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 Indorama Ventures and Khon Kaen into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Indorama Ventures PCL and Khon Kaen Sugar, you can compare the effects of market volatilities on Indorama Ventures and Khon Kaen 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 Indorama Ventures with a short position of Khon Kaen. Check out your portfolio center. Please also check ongoing floating volatility patterns of Indorama Ventures and Khon Kaen.
Diversification Opportunities for Indorama Ventures and Khon Kaen
0.14 | Correlation Coefficient |
Average diversification
The 3 months correlation between Indorama and Khon is 0.14. Overlapping area represents the amount of risk that can be diversified away by holding Indorama Ventures PCL and Khon Kaen Sugar in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Khon Kaen Sugar and Indorama Ventures 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 Indorama Ventures PCL are associated (or correlated) with Khon Kaen. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Khon Kaen Sugar has no effect on the direction of Indorama Ventures i.e., Indorama Ventures and Khon Kaen go up and down completely randomly.
Pair Corralation between Indorama Ventures and Khon Kaen
Assuming the 90 days trading horizon Indorama Ventures PCL is expected to generate 1.35 times more return on investment than Khon Kaen. However, Indorama Ventures is 1.35 times more volatile than Khon Kaen Sugar. It trades about -0.05 of its potential returns per unit of risk. Khon Kaen Sugar is currently generating about -0.19 per unit of risk. If you would invest 2,558 in Indorama Ventures PCL on September 3, 2024 and sell it today you would lose (58.00) from holding Indorama Ventures PCL or give up 2.27% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Indorama Ventures PCL vs. Khon Kaen Sugar
Performance |
| Timeline |
| Indorama Ventures PCL |
| Khon Kaen Sugar |
Indorama Ventures and Khon Kaen Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Indorama Ventures and Khon Kaen
The main advantage of trading using opposite Indorama Ventures and Khon Kaen positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Indorama Ventures position performs unexpectedly, Khon Kaen 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 Khon Kaen will offset losses from the drop in Khon Kaen's long position.| Indorama Ventures vs. PTT Public | Indorama Ventures vs. PTT Exploration and | Indorama Ventures vs. The Siam Cement | Indorama Ventures vs. CP ALL Public |
| Khon Kaen vs. Ichitan Group Public | Khon Kaen vs. Italian Thai Development Public | Khon Kaen vs. GFPT Public | Khon Kaen vs. Dynasty Ceramic 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 Pair Correlation module to compare performance and examine fundamental relationship between any two equity instruments.
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