Correlation Between Thonburi Medical and Charoen Pokphand
Can any of the company-specific risk be diversified away by investing in both Thonburi Medical and Charoen Pokphand 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 Thonburi Medical and Charoen Pokphand into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Thonburi Medical Centre and Charoen Pokphand Foods, you can compare the effects of market volatilities on Thonburi Medical and Charoen Pokphand 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 Thonburi Medical with a short position of Charoen Pokphand. Check out your portfolio center. Please also check ongoing floating volatility patterns of Thonburi Medical and Charoen Pokphand.
Diversification Opportunities for Thonburi Medical and Charoen Pokphand
-0.54 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Thonburi and Charoen is -0.54. Overlapping area represents the amount of risk that can be diversified away by holding Thonburi Medical Centre and Charoen Pokphand Foods in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Charoen Pokphand Foods and Thonburi Medical 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 Thonburi Medical Centre are associated (or correlated) with Charoen Pokphand. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Charoen Pokphand Foods has no effect on the direction of Thonburi Medical i.e., Thonburi Medical and Charoen Pokphand go up and down completely randomly.
Pair Corralation between Thonburi Medical and Charoen Pokphand
Assuming the 90 days trading horizon Thonburi Medical Centre is expected to generate 30.16 times more return on investment than Charoen Pokphand. However, Thonburi Medical is 30.16 times more volatile than Charoen Pokphand Foods. It trades about 0.04 of its potential returns per unit of risk. Charoen Pokphand Foods is currently generating about 0.01 per unit of risk. If you would invest 8,978 in Thonburi Medical Centre on September 14, 2024 and sell it today you would earn a total of 472.00 from holding Thonburi Medical Centre or generate 5.26% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Thonburi Medical Centre vs. Charoen Pokphand Foods
Performance |
| Timeline |
| Thonburi Medical Centre |
| Charoen Pokphand Foods |
Thonburi Medical and Charoen Pokphand Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Thonburi Medical and Charoen Pokphand
The main advantage of trading using opposite Thonburi Medical and Charoen Pokphand positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Thonburi Medical position performs unexpectedly, Charoen Pokphand 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 Charoen Pokphand will offset losses from the drop in Charoen Pokphand's long position.| Thonburi Medical vs. Aikchol Hospital Public | Thonburi Medical vs. Nonthavej Hospital Public | Thonburi Medical vs. Wattana Karnpaet Public | Thonburi Medical vs. Mahachai Hospital Public |
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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 Performance Analysis module to check effects of mean-variance optimization against your current asset allocation.
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