Correlation Between Thai President and Thai Group
Can any of the company-specific risk be diversified away by investing in both Thai President and Thai 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 Thai 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 Thai Group Holdings, you can compare the effects of market volatilities on Thai President and Thai 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 Thai Group. Check out your portfolio center. Please also check ongoing floating volatility patterns of Thai President and Thai Group.
Diversification Opportunities for Thai President and Thai Group
0.2 | Correlation Coefficient |
Modest diversification
The 3 months correlation between Thai and Thai is 0.2. Overlapping area represents the amount of risk that can be diversified away by holding Thai President Foods and Thai Group Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Thai Group Holdings 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 Thai Group. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Thai Group Holdings has no effect on the direction of Thai President i.e., Thai President and Thai Group go up and down completely randomly.
Pair Corralation between Thai President and Thai Group
Assuming the 90 days trading horizon Thai President is expected to generate 114.89 times less return on investment than Thai Group. But when comparing it to its historical volatility, Thai President Foods is 49.61 times less risky than Thai Group. It trades about 0.02 of its potential returns per unit of risk. Thai Group Holdings is currently generating about 0.04 of returns per unit of risk over similar time horizon. If you would invest 1,820 in Thai Group Holdings on January 15, 2025 and sell it today you would lose (800.00) from holding Thai Group Holdings or give up 43.96% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Thai President Foods vs. Thai Group Holdings
Performance |
| Timeline |
| Thai President Foods |
| Thai Group Holdings |
Thai President and Thai Group Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Thai President and Thai Group
The main advantage of trading using opposite Thai President and Thai Group positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Thai President position performs unexpectedly, Thai 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 Thai Group will offset losses from the drop in Thai Group'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 |
| Thai Group vs. Ratchthani Leasing Public | Thai Group vs. TEAM Consulting Engineering | Thai Group vs. Thai President Foods | Thai Group vs. Thai Reinsurance 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 Alpha Finder module to use alpha and beta coefficients to find investment opportunities after accounting for the risk.
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