Correlation Between Thai President and Taokaenoi Food
Can any of the company-specific risk be diversified away by investing in both Thai President and Taokaenoi Food 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 Taokaenoi Food 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 Taokaenoi Food Marketing, you can compare the effects of market volatilities on Thai President and Taokaenoi Food 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 Taokaenoi Food. Check out your portfolio center. Please also check ongoing floating volatility patterns of Thai President and Taokaenoi Food.
Diversification Opportunities for Thai President and Taokaenoi Food
0.44 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Thai and Taokaenoi is 0.44. Overlapping area represents the amount of risk that can be diversified away by holding Thai President Foods and Taokaenoi Food Marketing in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Taokaenoi Food Marketing 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 Taokaenoi Food. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Taokaenoi Food Marketing has no effect on the direction of Thai President i.e., Thai President and Taokaenoi Food go up and down completely randomly.
Pair Corralation between Thai President and Taokaenoi Food
Assuming the 90 days trading horizon Thai President Foods is expected to generate 0.15 times more return on investment than Taokaenoi Food. However, Thai President Foods is 6.79 times less risky than Taokaenoi Food. It trades about -0.11 of its potential returns per unit of risk. Taokaenoi Food Marketing is currently generating about -0.16 per unit of risk. If you would invest 20,300 in Thai President Foods on September 13, 2024 and sell it today you would lose (350.00) from holding Thai President Foods or give up 1.72% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Thai President Foods vs. Taokaenoi Food Marketing
Performance |
| Timeline |
| Thai President Foods |
| Taokaenoi Food Marketing |
Thai President and Taokaenoi Food Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Thai President and Taokaenoi Food
The main advantage of trading using opposite Thai President and Taokaenoi Food positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Thai President position performs unexpectedly, Taokaenoi Food 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 Taokaenoi Food will offset losses from the drop in Taokaenoi Food's long position.| Thai President vs. GFPT Public | Thai President vs. Dynasty Ceramic Public | Thai President vs. Haad Thip Public | Thai President vs. The Erawan Group |
| Taokaenoi Food vs. GFPT Public | Taokaenoi Food vs. Dynasty Ceramic Public | Taokaenoi Food vs. Haad Thip Public | Taokaenoi Food vs. The Erawan Group |
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 Backtesting module to avoid under-diversification and over-optimization by backtesting your portfolios.
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