Correlation Between Tropical Canning and Bank of Ayudhya
Can any of the company-specific risk be diversified away by investing in both Tropical Canning and Bank of Ayudhya 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 Tropical Canning and Bank of Ayudhya into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Tropical Canning Public and Bank of Ayudhya, you can compare the effects of market volatilities on Tropical Canning and Bank of Ayudhya 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 Tropical Canning with a short position of Bank of Ayudhya. Check out your portfolio center. Please also check ongoing floating volatility patterns of Tropical Canning and Bank of Ayudhya.
Diversification Opportunities for Tropical Canning and Bank of Ayudhya
0.21 | Correlation Coefficient |
Modest diversification
The 3 months correlation between Tropical and Bank is 0.21. Overlapping area represents the amount of risk that can be diversified away by holding Tropical Canning Public and Bank of Ayudhya in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Bank of Ayudhya and Tropical Canning 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 Tropical Canning Public are associated (or correlated) with Bank of Ayudhya. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Bank of Ayudhya has no effect on the direction of Tropical Canning i.e., Tropical Canning and Bank of Ayudhya go up and down completely randomly.
Pair Corralation between Tropical Canning and Bank of Ayudhya
Assuming the 90 days horizon Tropical Canning Public is expected to under-perform the Bank of Ayudhya. In addition to that, Tropical Canning is 1.75 times more volatile than Bank of Ayudhya. It trades about -0.52 of its total potential returns per unit of risk. Bank of Ayudhya is currently generating about 0.05 per unit of volatility. If you would invest 2,480 in Bank of Ayudhya on September 3, 2024 and sell it today you would earn a total of 20.00 from holding Bank of Ayudhya or generate 0.81% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Tropical Canning Public vs. Bank of Ayudhya
Performance |
| Timeline |
| Tropical Canning Public |
| Bank of Ayudhya |
Tropical Canning and Bank of Ayudhya Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Tropical Canning and Bank of Ayudhya
The main advantage of trading using opposite Tropical Canning and Bank of Ayudhya positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Tropical Canning position performs unexpectedly, Bank of Ayudhya 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 Bank of Ayudhya will offset losses from the drop in Bank of Ayudhya's long position.| Tropical Canning vs. Thai Vegetable Oil | Tropical Canning vs. Tipco Foods Public | Tropical Canning vs. Haad Thip Public | Tropical Canning vs. SP Syndicate 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 Funds Screener module to find actively-traded funds from around the world traded on over 30 global exchanges.
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