Correlation Between RETAIL FOOD and THAI BEVERAGE
Can any of the company-specific risk be diversified away by investing in both RETAIL FOOD and THAI BEVERAGE 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 RETAIL FOOD and THAI BEVERAGE into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between RETAIL FOOD GROUP and THAI BEVERAGE, you can compare the effects of market volatilities on RETAIL FOOD and THAI BEVERAGE 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 RETAIL FOOD with a short position of THAI BEVERAGE. Check out your portfolio center. Please also check ongoing floating volatility patterns of RETAIL FOOD and THAI BEVERAGE.
Diversification Opportunities for RETAIL FOOD and THAI BEVERAGE
-0.12 | Correlation Coefficient |
Good diversification
The 3 months correlation between RETAIL and THAI is -0.12. Overlapping area represents the amount of risk that can be diversified away by holding RETAIL FOOD GROUP and THAI BEVERAGE in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on THAI BEVERAGE and RETAIL FOOD 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 RETAIL FOOD GROUP are associated (or correlated) with THAI BEVERAGE. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of THAI BEVERAGE has no effect on the direction of RETAIL FOOD i.e., RETAIL FOOD and THAI BEVERAGE go up and down completely randomly.
Pair Corralation between RETAIL FOOD and THAI BEVERAGE
Assuming the 90 days trading horizon RETAIL FOOD GROUP is expected to generate 0.97 times more return on investment than THAI BEVERAGE. However, RETAIL FOOD GROUP is 1.03 times less risky than THAI BEVERAGE. It trades about 0.19 of its potential returns per unit of risk. THAI BEVERAGE is currently generating about -0.08 per unit of risk. If you would invest 3.80 in RETAIL FOOD GROUP on August 24, 2024 and sell it today you would earn a total of 0.40 from holding RETAIL FOOD GROUP or generate 10.53% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
RETAIL FOOD GROUP vs. THAI BEVERAGE
Performance |
| Timeline |
| RETAIL FOOD GROUP |
| THAI BEVERAGE |
RETAIL FOOD and THAI BEVERAGE Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with RETAIL FOOD and THAI BEVERAGE
The main advantage of trading using opposite RETAIL FOOD and THAI BEVERAGE positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if RETAIL FOOD position performs unexpectedly, THAI BEVERAGE 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 BEVERAGE will offset losses from the drop in THAI BEVERAGE's long position.| RETAIL FOOD vs. Apple Inc | RETAIL FOOD vs. Apple Inc | RETAIL FOOD vs. Apple Inc | RETAIL FOOD vs. Apple Inc |
| THAI BEVERAGE vs. TYSON FOODS A | THAI BEVERAGE vs. AUSTEVOLL SEAFOOD | THAI BEVERAGE vs. DIVERSIFIED ROYALTY | THAI BEVERAGE vs. SWISS WATER DECAFFCOFFEE |
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 Funds Screener module to find actively-traded funds from around the world traded on over 30 global exchanges.
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