Correlation Between RB Food and POSCO Thainox
Can any of the company-specific risk be diversified away by investing in both RB Food and POSCO Thainox 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 RB Food and POSCO Thainox into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between RB Food Supply and POSCO Thainox Public, you can compare the effects of market volatilities on RB Food and POSCO Thainox 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 RB Food with a short position of POSCO Thainox. Check out your portfolio center. Please also check ongoing floating volatility patterns of RB Food and POSCO Thainox.
Diversification Opportunities for RB Food and POSCO Thainox
0.87 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between RBF and POSCO is 0.87. Overlapping area represents the amount of risk that can be diversified away by holding RB Food Supply and POSCO Thainox Public in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on POSCO Thainox Public and RB 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 RB Food Supply are associated (or correlated) with POSCO Thainox. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of POSCO Thainox Public has no effect on the direction of RB Food i.e., RB Food and POSCO Thainox go up and down completely randomly.
Pair Corralation between RB Food and POSCO Thainox
Assuming the 90 days trading horizon RB Food Supply is expected to generate 1.65 times more return on investment than POSCO Thainox. However, RB Food is 1.65 times more volatile than POSCO Thainox Public. It trades about 0.2 of its potential returns per unit of risk. POSCO Thainox Public is currently generating about -0.12 per unit of risk. If you would invest 570.00 in RB Food Supply on August 30, 2024 and sell it today you would earn a total of 85.00 from holding RB Food Supply or generate 14.91% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
RB Food Supply vs. POSCO Thainox Public
Performance |
| Timeline |
| RB Food Supply |
| POSCO Thainox Public |
RB Food and POSCO Thainox Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with RB Food and POSCO Thainox
The main advantage of trading using opposite RB Food and POSCO Thainox positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if RB Food position performs unexpectedly, POSCO Thainox 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 POSCO Thainox will offset losses from the drop in POSCO Thainox's long position.| RB Food vs. Osotspa Public | RB Food vs. Thai Union Group | RB Food vs. Carabao Group Public | RB Food vs. PTG Energy PCL |
| POSCO Thainox vs. Internet Thailand Public | POSCO Thainox vs. Millcon Steel Public | POSCO Thainox vs. G J Steel | POSCO Thainox vs. Italian Thai Development 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 Fundamentals Comparison module to compare fundamentals across multiple equities to find investing opportunities.
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