Correlation Between S Khonkaen and NSL Foods
Can any of the company-specific risk be diversified away by investing in both S Khonkaen and NSL 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 S Khonkaen and NSL Foods into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between S Khonkaen Foods and NSL Foods Public, you can compare the effects of market volatilities on S Khonkaen and NSL 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 S Khonkaen with a short position of NSL Foods. Check out your portfolio center. Please also check ongoing floating volatility patterns of S Khonkaen and NSL Foods.
Diversification Opportunities for S Khonkaen and NSL Foods
0.28 | Correlation Coefficient |
Modest diversification
The 3 months correlation between SORKON and NSL is 0.28. Overlapping area represents the amount of risk that can be diversified away by holding S Khonkaen Foods and NSL Foods Public in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on NSL Foods Public and S Khonkaen 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 S Khonkaen Foods are associated (or correlated) with NSL Foods. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of NSL Foods Public has no effect on the direction of S Khonkaen i.e., S Khonkaen and NSL Foods go up and down completely randomly.
Pair Corralation between S Khonkaen and NSL Foods
Assuming the 90 days trading horizon S Khonkaen Foods is expected to generate 0.44 times more return on investment than NSL Foods. However, S Khonkaen Foods is 2.26 times less risky than NSL Foods. It trades about -0.24 of its potential returns per unit of risk. NSL Foods Public is currently generating about -0.25 per unit of risk. If you would invest 442.00 in S Khonkaen Foods on September 15, 2024 and sell it today you would lose (14.00) from holding S Khonkaen Foods or give up 3.17% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
S Khonkaen Foods vs. NSL Foods Public
Performance |
| Timeline |
| S Khonkaen Foods |
| NSL Foods Public |
S Khonkaen and NSL Foods Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with S Khonkaen and NSL Foods
The main advantage of trading using opposite S Khonkaen and NSL Foods positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if S Khonkaen position performs unexpectedly, NSL 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 NSL Foods will offset losses from the drop in NSL Foods' long position.| S Khonkaen vs. Thaitheparos Public | S Khonkaen vs. Surapon Foods Public | S Khonkaen vs. Tipco Foods Public | S Khonkaen vs. Haad Thip Public |
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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 Diagnostics module to use generated alerts and portfolio events aggregator to diagnose current holdings.
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