Correlation Between Thai Rung and Univanich Palm
Can any of the company-specific risk be diversified away by investing in both Thai Rung and Univanich Palm 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 Rung and Univanich Palm into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Thai Rung Union and Univanich Palm Oil, you can compare the effects of market volatilities on Thai Rung and Univanich Palm 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 Rung with a short position of Univanich Palm. Check out your portfolio center. Please also check ongoing floating volatility patterns of Thai Rung and Univanich Palm.
Diversification Opportunities for Thai Rung and Univanich Palm
0.24 | Correlation Coefficient |
Modest diversification
The 3 months correlation between Thai and Univanich is 0.24. Overlapping area represents the amount of risk that can be diversified away by holding Thai Rung Union and Univanich Palm Oil in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Univanich Palm Oil and Thai Rung 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 Rung Union are associated (or correlated) with Univanich Palm. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Univanich Palm Oil has no effect on the direction of Thai Rung i.e., Thai Rung and Univanich Palm go up and down completely randomly.
Pair Corralation between Thai Rung and Univanich Palm
Assuming the 90 days trading horizon Thai Rung is expected to generate 33.75 times less return on investment than Univanich Palm. But when comparing it to its historical volatility, Thai Rung Union is 1.1 times less risky than Univanich Palm. It trades about 0.0 of its potential returns per unit of risk. Univanich Palm Oil is currently generating about 0.08 of returns per unit of risk over similar time horizon. If you would invest 910.00 in Univanich Palm Oil on September 4, 2024 and sell it today you would earn a total of 10.00 from holding Univanich Palm Oil or generate 1.1% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 95.45% |
| Values | Daily Returns |
Thai Rung Union vs. Univanich Palm Oil
Performance |
| Timeline |
| Thai Rung Union |
| Univanich Palm Oil |
Thai Rung and Univanich Palm Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Thai Rung and Univanich Palm
The main advantage of trading using opposite Thai Rung and Univanich Palm positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Thai Rung position performs unexpectedly, Univanich Palm 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 Univanich Palm will offset losses from the drop in Univanich Palm's long position.| Thai Rung vs. Central Pattana Public | Thai Rung vs. CP ALL Public | Thai Rung vs. Bangkok Dusit Medical | Thai Rung vs. Airports of Thailand |
| Univanich Palm vs. Chumporn Palm Oil | Univanich Palm vs. United Palm Oil | Univanich Palm vs. Thai Vegetable Oil | Univanich Palm vs. Sri Trang Agro Industry |
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 Manager module to state of the art Portfolio Manager to monitor and improve performance of your invested capital.
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