Correlation Between Thai President and Thaifoods Group
Can any of the company-specific risk be diversified away by investing in both Thai President and Thaifoods Group 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 Thaifoods Group 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 Thaifoods Group Public, you can compare the effects of market volatilities on Thai President and Thaifoods Group 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 Thaifoods Group. Check out your portfolio center. Please also check ongoing floating volatility patterns of Thai President and Thaifoods Group.
Diversification Opportunities for Thai President and Thaifoods Group
0.02 | Correlation Coefficient |
Significant diversification
The 3 months correlation between Thai and Thaifoods is 0.02. Overlapping area represents the amount of risk that can be diversified away by holding Thai President Foods and Thaifoods Group Public in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Thaifoods Group 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 Thaifoods Group. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Thaifoods Group Public has no effect on the direction of Thai President i.e., Thai President and Thaifoods Group go up and down completely randomly.
Pair Corralation between Thai President and Thaifoods Group
Assuming the 90 days trading horizon Thai President Foods is expected to under-perform the Thaifoods Group. But the stock apears to be less risky and, when comparing its historical volatility, Thai President Foods is 116.55 times less risky than Thaifoods Group. The stock trades about -0.03 of its potential returns per unit of risk. The Thaifoods Group Public is currently generating about 0.08 of returns per unit of risk over similar time horizon. If you would invest 407.00 in Thaifoods Group Public on September 3, 2024 and sell it today you would lose (39.00) from holding Thaifoods Group Public or give up 9.58% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Thai President Foods vs. Thaifoods Group Public
Performance |
| Timeline |
| Thai President Foods |
| Thaifoods Group Public |
Thai President and Thaifoods Group Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Thai President and Thaifoods Group
The main advantage of trading using opposite Thai President and Thaifoods Group positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Thai President position performs unexpectedly, Thaifoods Group 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 Thaifoods Group will offset losses from the drop in Thaifoods Group'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 |
| Thaifoods Group vs. Thaifoods Group Public | Thaifoods Group vs. Thai President Foods | Thaifoods Group vs. Thai Capital | Thaifoods Group vs. Thaicom 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 Companies Directory module to evaluate performance of over 100,000 Stocks, Funds, and ETFs against different fundamentals.
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