Correlation Between Thai President and MK Restaurant
Can any of the company-specific risk be diversified away by investing in both Thai President and MK Restaurant 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 Thai President and MK Restaurant into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Thai President Foods and MK Restaurant Group, you can compare the effects of market volatilities on Thai President and MK Restaurant 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 Thai President with a short position of MK Restaurant. Check out your portfolio center. Please also check ongoing floating volatility patterns of Thai President and MK Restaurant.
Diversification Opportunities for Thai President and MK Restaurant
0.24 | Correlation Coefficient |
Modest diversification
The 3 months correlation between Thai and MK Restaurant is 0.24. Overlapping area represents the amount of risk that can be diversified away by holding Thai President Foods and MK Restaurant Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on MK Restaurant Group and Thai President 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 Thai President Foods are associated (or correlated) with MK Restaurant. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of MK Restaurant Group has no effect on the direction of Thai President i.e., Thai President and MK Restaurant go up and down completely randomly.
Pair Corralation between Thai President and MK Restaurant
Assuming the 90 days trading horizon Thai President Foods is expected to generate 0.68 times more return on investment than MK Restaurant. However, Thai President Foods is 1.47 times less risky than MK Restaurant. It trades about 0.02 of its potential returns per unit of risk. MK Restaurant Group is currently generating about -0.1 per unit of risk. If you would invest 19,129 in Thai President Foods on September 3, 2024 and sell it today you would earn a total of 971.00 from holding Thai President Foods or generate 5.08% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Thai President Foods vs. MK Restaurant Group
Performance |
| Timeline |
| Thai President Foods |
| MK Restaurant Group |
Thai President and MK Restaurant Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Thai President and MK Restaurant
The main advantage of trading using opposite Thai President and MK Restaurant positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Thai President position performs unexpectedly, MK Restaurant 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 MK Restaurant will offset losses from the drop in MK Restaurant's long position.| Thai President vs. Airports of Thailand | Thai President vs. PTT Public | Thai President vs. Bangkok Dusit Medical | Thai President vs. Kasikornbank Public |
| MK Restaurant vs. Minor International Public | MK Restaurant vs. Home Product Center | MK Restaurant vs. CP ALL Public | MK Restaurant vs. Central Pattana 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 Pattern Recognition module to use different Pattern Recognition models to time the market across multiple global exchanges.
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