Correlation Between Krung Thai and Food Moments
Can any of the company-specific risk be diversified away by investing in both Krung Thai and Food Moments 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 Krung Thai and Food Moments into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Krung Thai Bank and Food Moments PCL, you can compare the effects of market volatilities on Krung Thai and Food Moments 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 Krung Thai with a short position of Food Moments. Check out your portfolio center. Please also check ongoing floating volatility patterns of Krung Thai and Food Moments.
Diversification Opportunities for Krung Thai and Food Moments
-0.5 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Krung and Food is -0.5. Overlapping area represents the amount of risk that can be diversified away by holding Krung Thai Bank and Food Moments PCL in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Food Moments PCL and Krung Thai 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 Krung Thai Bank are associated (or correlated) with Food Moments. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Food Moments PCL has no effect on the direction of Krung Thai i.e., Krung Thai and Food Moments go up and down completely randomly.
Pair Corralation between Krung Thai and Food Moments
Assuming the 90 days trading horizon Krung Thai Bank is expected to generate 0.34 times more return on investment than Food Moments. However, Krung Thai Bank is 2.9 times less risky than Food Moments. It trades about -0.18 of its potential returns per unit of risk. Food Moments PCL is currently generating about -0.11 per unit of risk. If you would invest 2,090 in Krung Thai Bank on August 29, 2024 and sell it today you would lose (60.00) from holding Krung Thai Bank or give up 2.87% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Krung Thai Bank vs. Food Moments PCL
Performance |
| Timeline |
| Krung Thai Bank |
| Food Moments PCL |
Krung Thai and Food Moments Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Krung Thai and Food Moments
The main advantage of trading using opposite Krung Thai and Food Moments positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Krung Thai position performs unexpectedly, Food Moments 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 Food Moments will offset losses from the drop in Food Moments' long position.| Krung Thai vs. Supalai Public | Krung Thai vs. Thai Oil Public | Krung Thai vs. The Erawan Group | Krung Thai vs. Ditto Public |
| Food Moments vs. Delta Electronics Public | Food Moments vs. Delta Electronics Public | Food Moments vs. Airports of Thailand | Food Moments vs. Airports of Thailand |
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 Portfolio Comparator module to compare the composition, asset allocations and performance of any two portfolios in your account.
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