Correlation Between Performance Food and Thai Beverage
Can any of the company-specific risk be diversified away by investing in both Performance Food and Thai Beverage 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 Performance Food and Thai Beverage into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Performance Food Group and Thai Beverage Public, you can compare the effects of market volatilities on Performance Food and Thai Beverage 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 Performance Food with a short position of Thai Beverage. Check out your portfolio center. Please also check ongoing floating volatility patterns of Performance Food and Thai Beverage.
Diversification Opportunities for Performance Food and Thai Beverage
0.55 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Performance and Thai is 0.55. Overlapping area represents the amount of risk that can be diversified away by holding Performance Food Group and Thai Beverage Public in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Thai Beverage Public and Performance Food 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 Performance Food Group are associated (or correlated) with Thai Beverage. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Thai Beverage Public has no effect on the direction of Performance Food i.e., Performance Food and Thai Beverage go up and down completely randomly.
Pair Corralation between Performance Food and Thai Beverage
Assuming the 90 days trading horizon Performance Food is expected to generate 2.95 times less return on investment than Thai Beverage. But when comparing it to its historical volatility, Performance Food Group is 3.71 times less risky than Thai Beverage. It trades about 0.06 of its potential returns per unit of risk. Thai Beverage Public is currently generating about 0.05 of returns per unit of risk over similar time horizon. If you would invest 17.00 in Thai Beverage Public on October 16, 2024 and sell it today you would earn a total of 19.00 from holding Thai Beverage Public or generate 111.76% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Performance Food Group vs. Thai Beverage Public
Performance |
| Timeline |
| Performance Food |
| Thai Beverage Public |
Performance Food and Thai Beverage Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Performance Food and Thai Beverage
The main advantage of trading using opposite Performance Food and Thai Beverage positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Performance Food position performs unexpectedly, Thai Beverage 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 Thai Beverage will offset losses from the drop in Thai Beverage's long position.| Performance Food vs. VULCAN MATERIALS | Performance Food vs. Easy Software AG | Performance Food vs. Martin Marietta Materials | Performance Food vs. Rayonier Advanced Materials |
| Thai Beverage vs. National Beverage Corp | Thai Beverage vs. United Breweries Co | Thai Beverage vs. Performance Food Group | Thai Beverage vs. THAI BEVERAGE |
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 File Import module to quickly import all of your third-party portfolios from your local drive in csv format.
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