Correlation Between President Bakery and MK Restaurant
Can any of the company-specific risk be diversified away by investing in both President Bakery and MK Restaurant 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 President Bakery and MK Restaurant into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between President Bakery Public and MK Restaurant Group, you can compare the effects of market volatilities on President Bakery and MK Restaurant 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 President Bakery with a short position of MK Restaurant. Check out your portfolio center. Please also check ongoing floating volatility patterns of President Bakery and MK Restaurant.
Diversification Opportunities for President Bakery and MK Restaurant
-0.2 | Correlation Coefficient |
Good diversification
The 3 months correlation between President and MK Restaurant is -0.2. Overlapping area represents the amount of risk that can be diversified away by holding President Bakery Public and MK Restaurant Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on MK Restaurant Group and President Bakery 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 President Bakery Public are associated (or correlated) with MK Restaurant. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of MK Restaurant Group has no effect on the direction of President Bakery i.e., President Bakery and MK Restaurant go up and down completely randomly.
Pair Corralation between President Bakery and MK Restaurant
Assuming the 90 days horizon President Bakery Public is expected to generate 0.44 times more return on investment than MK Restaurant. However, President Bakery Public is 2.27 times less risky than MK Restaurant. It trades about -0.04 of its potential returns per unit of risk. MK Restaurant Group is currently generating about -0.1 per unit of risk. 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 | 99.78% |
| Values | Daily Returns |
President Bakery Public vs. MK Restaurant Group
Performance |
| Timeline |
| President Bakery Public |
| MK Restaurant Group |
President Bakery and MK Restaurant Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with President Bakery and MK Restaurant
The main advantage of trading using opposite President Bakery and MK Restaurant positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if President Bakery position performs unexpectedly, MK Restaurant 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 MK Restaurant will offset losses from the drop in MK Restaurant's long position.The idea behind President Bakery Public and MK Restaurant Group pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.| 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 Efficient Frontier module to plot and analyze your portfolio and positions against risk-return landscape of the market..
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