Correlation Between Sri Trang and Thai Vegetable
Can any of the company-specific risk be diversified away by investing in both Sri Trang and Thai Vegetable 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 Sri Trang and Thai Vegetable into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Sri Trang Agro Industry and Thai Vegetable Oil, you can compare the effects of market volatilities on Sri Trang and Thai Vegetable 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 Sri Trang with a short position of Thai Vegetable. Check out your portfolio center. Please also check ongoing floating volatility patterns of Sri Trang and Thai Vegetable.
Diversification Opportunities for Sri Trang and Thai Vegetable
-0.05 | Correlation Coefficient |
Good diversification
The 3 months correlation between Sri and Thai is -0.05. Overlapping area represents the amount of risk that can be diversified away by holding Sri Trang Agro Industry and Thai Vegetable Oil in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Thai Vegetable Oil and Sri Trang 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 Sri Trang Agro Industry are associated (or correlated) with Thai Vegetable. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Thai Vegetable Oil has no effect on the direction of Sri Trang i.e., Sri Trang and Thai Vegetable go up and down completely randomly.
Pair Corralation between Sri Trang and Thai Vegetable
Assuming the 90 days trading horizon Sri Trang Agro Industry is expected to under-perform the Thai Vegetable. In addition to that, Sri Trang is 2.02 times more volatile than Thai Vegetable Oil. It trades about -0.07 of its total potential returns per unit of risk. Thai Vegetable Oil is currently generating about 0.04 per unit of volatility. If you would invest 2,209 in Thai Vegetable Oil on August 27, 2024 and sell it today you would earn a total of 121.00 from holding Thai Vegetable Oil or generate 5.48% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Sri Trang Agro Industry vs. Thai Vegetable Oil
Performance |
| Timeline |
| Sri Trang Agro |
| Thai Vegetable Oil |
Sri Trang and Thai Vegetable Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Sri Trang and Thai Vegetable
The main advantage of trading using opposite Sri Trang and Thai Vegetable positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Sri Trang position performs unexpectedly, Thai Vegetable 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 Vegetable will offset losses from the drop in Thai Vegetable's long position.| Sri Trang vs. SCB X Public | Sri Trang vs. Kasikornbank Public | Sri Trang vs. PTT Public | Sri Trang vs. Kasikornbank 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 Positions Ratings module to determine portfolio positions ratings based on digital equity recommendations. Macroaxis instant position ratings are based on combination of fundamental analysis and risk-adjusted market performance.
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