Correlation Between Thaifoods Group and Hana Microelectronics
Can any of the company-specific risk be diversified away by investing in both Thaifoods Group and Hana Microelectronics 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 Thaifoods Group and Hana Microelectronics into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Thaifoods Group Public and Hana Microelectronics Public, you can compare the effects of market volatilities on Thaifoods Group and Hana Microelectronics 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 Thaifoods Group with a short position of Hana Microelectronics. Check out your portfolio center. Please also check ongoing floating volatility patterns of Thaifoods Group and Hana Microelectronics.
Diversification Opportunities for Thaifoods Group and Hana Microelectronics
0.63 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Thaifoods and Hana is 0.63. Overlapping area represents the amount of risk that can be diversified away by holding Thaifoods Group Public and Hana Microelectronics Public in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Hana Microelectronics and Thaifoods Group 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 Thaifoods Group Public are associated (or correlated) with Hana Microelectronics. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Hana Microelectronics has no effect on the direction of Thaifoods Group i.e., Thaifoods Group and Hana Microelectronics go up and down completely randomly.
Pair Corralation between Thaifoods Group and Hana Microelectronics
Assuming the 90 days trading horizon Thaifoods Group Public is expected to generate 0.33 times more return on investment than Hana Microelectronics. However, Thaifoods Group Public is 3.05 times less risky than Hana Microelectronics. It trades about -0.37 of its potential returns per unit of risk. Hana Microelectronics Public is currently generating about -0.38 per unit of risk. If you would invest 414.00 in Thaifoods Group Public on August 28, 2024 and sell it today you would lose (38.00) from holding Thaifoods Group Public or give up 9.18% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Thaifoods Group Public vs. Hana Microelectronics Public
Performance |
| Timeline |
| Thaifoods Group Public |
| Hana Microelectronics |
Thaifoods Group and Hana Microelectronics Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Thaifoods Group and Hana Microelectronics
The main advantage of trading using opposite Thaifoods Group and Hana Microelectronics positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Thaifoods Group position performs unexpectedly, Hana Microelectronics 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 Hana Microelectronics will offset losses from the drop in Hana Microelectronics' long position.The idea behind Thaifoods Group Public and Hana Microelectronics Public pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.| Hana Microelectronics vs. KCE Electronics Public | Hana Microelectronics vs. Land and Houses | Hana Microelectronics vs. Delta Electronics Public | Hana Microelectronics vs. The Siam Cement |
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 Competition Analyzer module to analyze and compare many basic indicators for a group of related or unrelated entities.
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