Correlation Between Krung Thai and Exotic Food
Can any of the company-specific risk be diversified away by investing in both Krung Thai and Exotic Food 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 Exotic Food 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 Exotic Food Public, you can compare the effects of market volatilities on Krung Thai and Exotic Food 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 Exotic Food. Check out your portfolio center. Please also check ongoing floating volatility patterns of Krung Thai and Exotic Food.
Diversification Opportunities for Krung Thai and Exotic Food
-0.09 | Correlation Coefficient |
Good diversification
The 3 months correlation between Krung and Exotic is -0.09. Overlapping area represents the amount of risk that can be diversified away by holding Krung Thai Bank and Exotic Food Public in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Exotic Food Public 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 Exotic Food. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Exotic Food Public has no effect on the direction of Krung Thai i.e., Krung Thai and Exotic Food go up and down completely randomly.
Pair Corralation between Krung Thai and Exotic Food
Assuming the 90 days trading horizon Krung Thai Bank is expected to generate 0.55 times more return on investment than Exotic Food. However, Krung Thai Bank is 1.81 times less risky than Exotic Food. It trades about 0.11 of its potential returns per unit of risk. Exotic Food Public is currently generating about -0.11 per unit of risk. If you would invest 1,670 in Krung Thai Bank on September 3, 2024 and sell it today you would earn a total of 330.00 from holding Krung Thai Bank or generate 19.76% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Krung Thai Bank vs. Exotic Food Public
Performance |
| Timeline |
| Krung Thai Bank |
| Exotic Food Public |
Krung Thai and Exotic Food Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Krung Thai and Exotic Food
The main advantage of trading using opposite Krung Thai and Exotic Food positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Krung Thai position performs unexpectedly, Exotic Food 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 Exotic Food will offset losses from the drop in Exotic Food's long position.| Krung Thai vs. The Siam Commercial | Krung Thai vs. Thai Oil Public | Krung Thai vs. Thai Union Group | Krung Thai vs. Kasikornbank Public |
| Exotic Food vs. Mega Lifesciences Public | Exotic Food vs. Com7 PCL | Exotic Food vs. Thai Union Group | Exotic Food vs. Jay Mart 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 Portfolio Optimization module to compute new portfolio that will generate highest expected return given your specified tolerance for risk.
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