Correlation Between Thai President and SCB X
Can any of the company-specific risk be diversified away by investing in both Thai President and SCB X 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 SCB X 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 SCB X Public, you can compare the effects of market volatilities on Thai President and SCB X 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 SCB X. Check out your portfolio center. Please also check ongoing floating volatility patterns of Thai President and SCB X.
Diversification Opportunities for Thai President and SCB X
-0.65 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Thai and SCB is -0.65. Overlapping area represents the amount of risk that can be diversified away by holding Thai President Foods and SCB X Public in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SCB X Public 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 SCB X. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of SCB X Public has no effect on the direction of Thai President i.e., Thai President and SCB X go up and down completely randomly.
Pair Corralation between Thai President and SCB X
Assuming the 90 days trading horizon Thai President Foods is expected to under-perform the SCB X. But the stock apears to be less risky and, when comparing its historical volatility, Thai President Foods is 2.63 times less risky than SCB X. The stock trades about -0.05 of its potential returns per unit of risk. The SCB X Public is currently generating about 0.12 of returns per unit of risk over similar time horizon. If you would invest 11,500 in SCB X Public on October 26, 2024 and sell it today you would earn a total of 750.00 from holding SCB X Public or generate 6.52% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Thai President Foods vs. SCB X Public
Performance |
| Timeline |
| Thai President Foods |
| SCB X Public |
Thai President and SCB X Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Thai President and SCB X
The main advantage of trading using opposite Thai President and SCB X positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Thai President position performs unexpectedly, SCB X 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 SCB X will offset losses from the drop in SCB X's long position.| Thai President vs. Thai Union Group | Thai President vs. President Bakery Public | Thai President vs. MK Restaurant Group | Thai President vs. Carabao Group 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 Portfolio Diagnostics module to use generated alerts and portfolio events aggregator to diagnose current holdings.
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