Correlation Between Thai President and Toray Textiles
Can any of the company-specific risk be diversified away by investing in both Thai President and Toray Textiles 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 Toray Textiles 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 Toray Textiles Public, you can compare the effects of market volatilities on Thai President and Toray Textiles 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 Toray Textiles. Check out your portfolio center. Please also check ongoing floating volatility patterns of Thai President and Toray Textiles.
Diversification Opportunities for Thai President and Toray Textiles
0.33 | Correlation Coefficient |
Weak diversification
The 3 months correlation between Thai and Toray is 0.33. Overlapping area represents the amount of risk that can be diversified away by holding Thai President Foods and Toray Textiles Public in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Toray Textiles 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 Toray Textiles. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Toray Textiles Public has no effect on the direction of Thai President i.e., Thai President and Toray Textiles go up and down completely randomly.
Pair Corralation between Thai President and Toray Textiles
Assuming the 90 days trading horizon Thai President Foods is expected to under-perform the Toray Textiles. But the stock apears to be less risky and, when comparing its historical volatility, Thai President Foods is 186.51 times less risky than Toray Textiles. The stock trades about -0.02 of its potential returns per unit of risk. The Toray Textiles Public is currently generating about 0.08 of returns per unit of risk over similar time horizon. If you would invest 5,001 in Toray Textiles Public on September 3, 2024 and sell it today you would earn a total of 349.00 from holding Toray Textiles Public or generate 6.98% 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. Toray Textiles Public
Performance |
| Timeline |
| Thai President Foods |
| Toray Textiles Public |
Thai President and Toray Textiles Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Thai President and Toray Textiles
The main advantage of trading using opposite Thai President and Toray Textiles positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Thai President position performs unexpectedly, Toray Textiles 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 Toray Textiles will offset losses from the drop in Toray Textiles' long position.| Thai President vs. Airports of Thailand | Thai President vs. PTT Public | Thai President vs. Bangkok Dusit Medical | Thai President vs. Kasikornbank Public |
| Toray Textiles vs. Thai Textile Industry | Toray Textiles vs. Thai Metal Drum | Toray Textiles vs. Trinity Watthana Public | Toray Textiles vs. Thai President Foods |
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 Anywhere module to track or share privately all of your investments from the convenience of any device.
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