Correlation Between Pan Asia and President Bakery
Can any of the company-specific risk be diversified away by investing in both Pan Asia 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 Pan Asia and President Bakery into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Pan Asia Footwear and President Bakery Public, you can compare the effects of market volatilities on Pan Asia 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 Pan Asia with a short position of President Bakery. Check out your portfolio center. Please also check ongoing floating volatility patterns of Pan Asia and President Bakery.
Diversification Opportunities for Pan Asia and President Bakery
-0.05 | Correlation Coefficient |
Good diversification
The 3 months correlation between Pan and President is -0.05. Overlapping area represents the amount of risk that can be diversified away by holding Pan Asia Footwear 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 Pan Asia 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 Pan Asia Footwear 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 Pan Asia i.e., Pan Asia and President Bakery go up and down completely randomly.
Pair Corralation between Pan Asia and President Bakery
Assuming the 90 days trading horizon Pan Asia Footwear is expected to generate 68.57 times more return on investment than President Bakery. However, Pan Asia is 68.57 times more volatile than President Bakery Public. It trades about 0.04 of its potential returns per unit of risk. President Bakery Public is currently generating about -0.04 per unit of risk. If you would invest 138.00 in Pan Asia Footwear on September 4, 2024 and sell it today you would lose (39.00) from holding Pan Asia Footwear or give up 28.26% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Pan Asia Footwear vs. President Bakery Public
Performance |
| Timeline |
| Pan Asia Footwear |
| President Bakery Public |
Pan Asia and President Bakery Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Pan Asia and President Bakery
The main advantage of trading using opposite Pan Asia and President Bakery positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Pan Asia 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.| Pan Asia vs. Central Pattana Public | Pan Asia vs. CP ALL Public | Pan Asia vs. Bangkok Dusit Medical | Pan Asia vs. Airports of Thailand |
| President Bakery vs. Airports of Thailand | President Bakery vs. PTT Public | President Bakery vs. Bangkok Dusit Medical | President Bakery 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 Risk-Return Analysis module to view associations between returns expected from investment and the risk you assume.
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