Correlation Between Surapon Foods and President Bakery
Can any of the company-specific risk be diversified away by investing in both Surapon Foods and President Bakery 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 Surapon Foods and President Bakery into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Surapon Foods Public and President Bakery Public, you can compare the effects of market volatilities on Surapon Foods and President Bakery 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 Surapon Foods with a short position of President Bakery. Check out your portfolio center. Please also check ongoing floating volatility patterns of Surapon Foods and President Bakery.
Diversification Opportunities for Surapon Foods and President Bakery
-0.01 | Correlation Coefficient |
Good diversification
The 3 months correlation between Surapon and President is -0.01. Overlapping area represents the amount of risk that can be diversified away by holding Surapon Foods Public and President Bakery Public in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on President Bakery Public and Surapon Foods 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 Surapon Foods Public are associated (or correlated) with President Bakery. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of President Bakery Public has no effect on the direction of Surapon Foods i.e., Surapon Foods and President Bakery go up and down completely randomly.
Pair Corralation between Surapon Foods and President Bakery
Assuming the 90 days trading horizon Surapon Foods Public is expected to under-perform the President Bakery. But the stock apears to be less risky and, when comparing its historical volatility, Surapon Foods Public is 1.45 times less risky than President Bakery. The stock trades about -0.09 of its potential returns per unit of risk. The President Bakery Public is currently generating about -0.01 of returns per unit of risk over similar time horizon. 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 |
Surapon Foods Public vs. President Bakery Public
Performance |
| Timeline |
| Surapon Foods Public |
| President Bakery Public |
Surapon Foods and President Bakery Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Surapon Foods and President Bakery
The main advantage of trading using opposite Surapon Foods and President Bakery positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Surapon Foods position performs unexpectedly, President Bakery 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 President Bakery will offset losses from the drop in President Bakery's long position.| Surapon Foods vs. CP ALL Public | Surapon Foods vs. Carabao Group Public | Surapon Foods vs. Thai Union Group | Surapon Foods vs. Minor International Public |
| President Bakery vs. MK Restaurant Group | President Bakery vs. Haad Thip Public | President Bakery vs. Thai President Foods | President Bakery 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 Suggestion module to get suggestions outside of your existing asset allocation including your own model portfolios.
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