Correlation Between MK Restaurant and President Bakery
Can any of the company-specific risk be diversified away by investing in both MK Restaurant and President Bakery 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 MK Restaurant and President Bakery into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between MK Restaurant Group and President Bakery Public, you can compare the effects of market volatilities on MK Restaurant and President Bakery 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 MK Restaurant with a short position of President Bakery. Check out your portfolio center. Please also check ongoing floating volatility patterns of MK Restaurant and President Bakery.
Diversification Opportunities for MK Restaurant and President Bakery
-0.22 | Correlation Coefficient |
Very good diversification
The 3 months correlation between MK Restaurant and President is -0.22. Overlapping area represents the amount of risk that can be diversified away by holding MK Restaurant Group and President Bakery Public in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on President Bakery Public and MK Restaurant 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 MK Restaurant Group are associated (or correlated) with President Bakery. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of President Bakery Public has no effect on the direction of MK Restaurant i.e., MK Restaurant and President Bakery go up and down completely randomly.
Pair Corralation between MK Restaurant and President Bakery
Given the investment horizon of 90 days MK Restaurant Group is expected to under-perform the President Bakery. In addition to that, MK Restaurant is 2.27 times more volatile than President Bakery Public. It trades about -0.09 of its total potential returns per unit of risk. President Bakery Public is currently generating about -0.04 per unit of volatility. If you would invest 6,770 in President Bakery Public on August 28, 2024 and sell it today you would lose (795.00) from holding President Bakery Public or give up 11.74% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
MK Restaurant Group vs. President Bakery Public
Performance |
| Timeline |
| MK Restaurant Group |
| President Bakery Public |
MK Restaurant and President Bakery Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with MK Restaurant and President Bakery
The main advantage of trading using opposite MK Restaurant and President Bakery positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if MK Restaurant position performs unexpectedly, President Bakery 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 President Bakery will offset losses from the drop in President Bakery's long position.| MK Restaurant vs. SCB X Public | MK Restaurant vs. Kasikornbank Public | MK Restaurant vs. PTT Public | MK Restaurant vs. Kasikornbank 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 Dashboard module to portfolio dashboard that provides centralized access to all your investments.
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