Correlation Between Thaifoods Group and Thai Eastern
Can any of the company-specific risk be diversified away by investing in both Thaifoods Group and Thai Eastern 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 Thai Eastern 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 Thai Eastern Group, you can compare the effects of market volatilities on Thaifoods Group and Thai Eastern 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 Thai Eastern. Check out your portfolio center. Please also check ongoing floating volatility patterns of Thaifoods Group and Thai Eastern.
Diversification Opportunities for Thaifoods Group and Thai Eastern
0.61 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Thaifoods and Thai is 0.61. Overlapping area represents the amount of risk that can be diversified away by holding Thaifoods Group Public and Thai Eastern Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Thai Eastern Group 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 Thai Eastern. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Thai Eastern Group has no effect on the direction of Thaifoods Group i.e., Thaifoods Group and Thai Eastern go up and down completely randomly.
Pair Corralation between Thaifoods Group and Thai Eastern
Assuming the 90 days trading horizon Thaifoods Group Public is expected to under-perform the Thai Eastern. But the stock apears to be less risky and, when comparing its historical volatility, Thaifoods Group Public is 1.38 times less risky than Thai Eastern. The stock trades about -0.02 of its potential returns per unit of risk. The Thai Eastern Group is currently generating about 0.0 of returns per unit of risk over similar time horizon. If you would invest 377.00 in Thai Eastern Group on August 29, 2024 and sell it today you would lose (59.00) from holding Thai Eastern Group or give up 15.65% 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. Thai Eastern Group
Performance |
| Timeline |
| Thaifoods Group Public |
| Thai Eastern Group |
Thaifoods Group and Thai Eastern Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Thaifoods Group and Thai Eastern
The main advantage of trading using opposite Thaifoods Group and Thai Eastern positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Thaifoods Group position performs unexpectedly, Thai Eastern 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 Eastern will offset losses from the drop in Thai Eastern's long position.The idea behind Thaifoods Group Public and Thai Eastern Group 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.| Thai Eastern vs. Srinanaporn Marketing Public | Thai Eastern vs. Thaifoods Group Public | Thai Eastern vs. Clover Power PCL | Thai Eastern vs. GFPT 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 Volatility module to check portfolio volatility and analyze historical return density to properly model market risk.
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