Correlation Between Lam Soon and United Palm
Can any of the company-specific risk be diversified away by investing in both Lam Soon and United Palm 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 Lam Soon and United Palm into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Lam Soon Public and United Palm Oil, you can compare the effects of market volatilities on Lam Soon and United Palm 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 Lam Soon with a short position of United Palm. Check out your portfolio center. Please also check ongoing floating volatility patterns of Lam Soon and United Palm.
Diversification Opportunities for Lam Soon and United Palm
1.0 | Correlation Coefficient |
No risk reduction
The 3 months correlation between Lam and United is 1.0. Overlapping area represents the amount of risk that can be diversified away by holding Lam Soon Public and United Palm Oil in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on United Palm Oil and Lam Soon 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 Lam Soon Public are associated (or correlated) with United Palm. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of United Palm Oil has no effect on the direction of Lam Soon i.e., Lam Soon and United Palm go up and down completely randomly.
Pair Corralation between Lam Soon and United Palm
Assuming the 90 days trading horizon Lam Soon Public is expected to generate 0.87 times more return on investment than United Palm. However, Lam Soon Public is 1.14 times less risky than United Palm. It trades about 0.09 of its potential returns per unit of risk. United Palm Oil is currently generating about 0.06 per unit of risk. If you would invest 486.00 in Lam Soon Public on August 24, 2024 and sell it today you would earn a total of 10.00 from holding Lam Soon Public or generate 2.06% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Lam Soon Public vs. United Palm Oil
Performance |
| Timeline |
| Lam Soon Public |
| United Palm Oil |
Lam Soon and United Palm Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Lam Soon and United Palm
The main advantage of trading using opposite Lam Soon and United Palm positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Lam Soon position performs unexpectedly, United Palm 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 United Palm will offset losses from the drop in United Palm's long position.| Lam Soon vs. CP ALL Public | Lam Soon vs. Carabao Group Public | Lam Soon vs. Thai Union Group | Lam Soon vs. Minor International Public |
| United Palm vs. Univanich Palm Oil | United Palm vs. Chumporn Palm Oil | United Palm vs. Lam Soon Public | United Palm vs. United Paper 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 Diagnostics module to use generated alerts and portfolio events aggregator to diagnose current holdings.
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