Correlation Between Thai Steel and NSL Foods
Can any of the company-specific risk be diversified away by investing in both Thai Steel and NSL Foods 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 Steel and NSL Foods into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Thai Steel Cable and NSL Foods Public, you can compare the effects of market volatilities on Thai Steel and NSL Foods 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 Steel with a short position of NSL Foods. Check out your portfolio center. Please also check ongoing floating volatility patterns of Thai Steel and NSL Foods.
Diversification Opportunities for Thai Steel and NSL Foods
-0.47 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Thai and NSL is -0.47. Overlapping area represents the amount of risk that can be diversified away by holding Thai Steel Cable and NSL Foods Public in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on NSL Foods Public and Thai Steel 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 Steel Cable are associated (or correlated) with NSL Foods. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of NSL Foods Public has no effect on the direction of Thai Steel i.e., Thai Steel and NSL Foods go up and down completely randomly.
Pair Corralation between Thai Steel and NSL Foods
Assuming the 90 days trading horizon Thai Steel Cable is expected to generate 0.4 times more return on investment than NSL Foods. However, Thai Steel Cable is 2.51 times less risky than NSL Foods. It trades about 0.15 of its potential returns per unit of risk. NSL Foods Public is currently generating about -0.18 per unit of risk. If you would invest 1,420 in Thai Steel Cable on September 13, 2024 and sell it today you would earn a total of 60.00 from holding Thai Steel Cable or generate 4.23% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Thai Steel Cable vs. NSL Foods Public
Performance |
| Timeline |
| Thai Steel Cable |
| NSL Foods Public |
Thai Steel and NSL Foods Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Thai Steel and NSL Foods
The main advantage of trading using opposite Thai Steel and NSL Foods positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Thai Steel position performs unexpectedly, NSL Foods 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 NSL Foods will offset losses from the drop in NSL Foods' long position.| Thai Steel vs. United Paper Public | Thai Steel vs. TMT Steel Public | Thai Steel vs. Thai Stanley Electric | Thai Steel vs. Inoue Rubber Public |
| NSL Foods vs. DOHOME | NSL Foods vs. Home Product Center | NSL Foods vs. Thai Steel Cable | NSL Foods vs. SAF Special Steel |
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 Instant Ratings module to determine any equity ratings based on digital recommendations. Macroaxis instant equity ratings are based on combination of fundamental analysis and risk-adjusted market performance.
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