Correlation Between President Bakery and Surapon Foods
Can any of the company-specific risk be diversified away by investing in both President Bakery and Surapon Foods 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 Surapon Foods 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 Surapon Foods Public, you can compare the effects of market volatilities on President Bakery and Surapon Foods 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 Surapon Foods. Check out your portfolio center. Please also check ongoing floating volatility patterns of President Bakery and Surapon Foods.
Diversification Opportunities for President Bakery and Surapon Foods
-0.01 | Correlation Coefficient |
Good diversification
The 3 months correlation between President and Surapon is -0.01. Overlapping area represents the amount of risk that can be diversified away by holding President Bakery Public and Surapon Foods Public in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Surapon Foods Public 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 Surapon Foods. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Surapon Foods Public has no effect on the direction of President Bakery i.e., President Bakery and Surapon Foods go up and down completely randomly.
Pair Corralation between President Bakery and Surapon Foods
Assuming the 90 days horizon President Bakery Public is expected to generate 1.45 times more return on investment than Surapon Foods. However, President Bakery is 1.45 times more volatile than Surapon Foods Public. It trades about -0.01 of its potential returns per unit of risk. Surapon Foods Public is currently generating about -0.09 per unit of risk. If you would invest 6,000 in President Bakery Public on August 24, 2024 and sell it today you would lose (25.00) from holding President Bakery Public or give up 0.42% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 95.45% |
| Values | Daily Returns |
President Bakery Public vs. Surapon Foods Public
Performance |
| Timeline |
| President Bakery Public |
| Surapon Foods Public |
President Bakery and Surapon Foods Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with President Bakery and Surapon Foods
The main advantage of trading using opposite President Bakery and Surapon Foods positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if President Bakery position performs unexpectedly, Surapon Foods 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 Surapon Foods will offset losses from the drop in Surapon Foods' long position.| President Bakery vs. MK Restaurant Group | President Bakery vs. Haad Thip Public | President Bakery vs. Thai President Foods | President Bakery vs. Minor International Public |
| Surapon Foods vs. CP ALL Public | Surapon Foods vs. Carabao Group Public | Surapon Foods vs. Thai Union Group | Surapon Foods vs. Minor International 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 Volatility module to check portfolio volatility and analyze historical return density to properly model market risk.
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