Correlation Between RB Food and Thai Steel
Can any of the company-specific risk be diversified away by investing in both RB Food and Thai Steel 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 Thai Steel 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 Thai Steel Cable, you can compare the effects of market volatilities on RB Food and Thai Steel 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 Thai Steel. Check out your portfolio center. Please also check ongoing floating volatility patterns of RB Food and Thai Steel.
Diversification Opportunities for RB Food and Thai Steel
0.89 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between RBF and Thai is 0.89. Overlapping area represents the amount of risk that can be diversified away by holding RB Food Supply and Thai Steel Cable in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Thai Steel Cable 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 Thai Steel. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Thai Steel Cable has no effect on the direction of RB Food i.e., RB Food and Thai Steel go up and down completely randomly.
Pair Corralation between RB Food and Thai Steel
Assuming the 90 days trading horizon RB Food Supply is expected to generate 3.64 times more return on investment than Thai Steel. However, RB Food is 3.64 times more volatile than Thai Steel Cable. It trades about 0.29 of its potential returns per unit of risk. Thai Steel Cable is currently generating about 0.23 per unit of risk. If you would invest 555.00 in RB Food Supply on September 4, 2024 and sell it today you would earn a total of 115.00 from holding RB Food Supply or generate 20.72% 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. Thai Steel Cable
Performance |
| Timeline |
| RB Food Supply |
| Thai Steel Cable |
RB Food and Thai Steel Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with RB Food and Thai Steel
The main advantage of trading using opposite RB Food and Thai Steel positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if RB Food position performs unexpectedly, Thai Steel 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 Steel will offset losses from the drop in Thai Steel's long position.| RB Food vs. Kingsmen CMTI Public | RB Food vs. Hydrotek Public | RB Food vs. Karmarts Public | RB Food vs. KC Metalsheet Public |
| Thai Steel vs. United Paper Public | Thai Steel vs. TMT Steel Public | Thai Steel vs. Thai Stanley Electric | Thai Steel vs. Inoue Rubber 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 Price Exposure Probability module to analyze equity upside and downside potential for a given time horizon across multiple markets.
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