Correlation Between LH Financial and Chiangmai Frozen
Can any of the company-specific risk be diversified away by investing in both LH Financial and Chiangmai Frozen 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 LH Financial and Chiangmai Frozen into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between LH Financial Group and Chiangmai Frozen Foods, you can compare the effects of market volatilities on LH Financial and Chiangmai Frozen 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 LH Financial with a short position of Chiangmai Frozen. Check out your portfolio center. Please also check ongoing floating volatility patterns of LH Financial and Chiangmai Frozen.
Diversification Opportunities for LH Financial and Chiangmai Frozen
0.83 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between LHFG and Chiangmai is 0.83. Overlapping area represents the amount of risk that can be diversified away by holding LH Financial Group and Chiangmai Frozen Foods in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Chiangmai Frozen Foods and LH Financial 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 LH Financial Group are associated (or correlated) with Chiangmai Frozen. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Chiangmai Frozen Foods has no effect on the direction of LH Financial i.e., LH Financial and Chiangmai Frozen go up and down completely randomly.
Pair Corralation between LH Financial and Chiangmai Frozen
Assuming the 90 days trading horizon LH Financial Group is expected to generate 1.25 times more return on investment than Chiangmai Frozen. However, LH Financial is 1.25 times more volatile than Chiangmai Frozen Foods. It trades about -0.04 of its potential returns per unit of risk. Chiangmai Frozen Foods is currently generating about -0.45 per unit of risk. If you would invest 78.00 in LH Financial Group on October 31, 2024 and sell it today you would lose (1.00) from holding LH Financial Group or give up 1.28% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
LH Financial Group vs. Chiangmai Frozen Foods
Performance |
| Timeline |
| LH Financial Group |
| Chiangmai Frozen Foods |
LH Financial and Chiangmai Frozen Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with LH Financial and Chiangmai Frozen
The main advantage of trading using opposite LH Financial and Chiangmai Frozen positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if LH Financial position performs unexpectedly, Chiangmai Frozen 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 Chiangmai Frozen will offset losses from the drop in Chiangmai Frozen's long position.| LH Financial vs. Quality Houses Public | LH Financial vs. Kiatnakin Phatra Bank | LH Financial vs. Land and Houses | LH Financial vs. TISCO Financial Group |
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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 Price Ceiling Movement module to calculate and plot Price Ceiling Movement for different equity instruments.
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