Correlation Between Thai Steel and RB Food
Can any of the company-specific risk be diversified away by investing in both Thai Steel and RB 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 Steel and RB Food 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 RB Food Supply, you can compare the effects of market volatilities on Thai Steel and RB 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 Steel with a short position of RB Food. Check out your portfolio center. Please also check ongoing floating volatility patterns of Thai Steel and RB Food.
Diversification Opportunities for Thai Steel and RB Food
0.89 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Thai and RBF is 0.89. Overlapping area represents the amount of risk that can be diversified away by holding Thai Steel Cable and RB Food Supply in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on RB Food Supply 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 RB Food. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of RB Food Supply has no effect on the direction of Thai Steel i.e., Thai Steel and RB Food go up and down completely randomly.
Pair Corralation between Thai Steel and RB Food
Assuming the 90 days trading horizon Thai Steel Cable is expected to generate 1.0 times more return on investment than RB Food. However, Thai Steel Cable is 1.0 times less risky than RB Food. It trades about 0.04 of its potential returns per unit of risk. RB Food Supply is currently generating about 0.04 per unit of risk. If you would invest 1,266 in Thai Steel Cable on September 4, 2024 and sell it today you would earn a total of 224.00 from holding Thai Steel Cable or generate 17.69% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Thai Steel Cable vs. RB Food Supply
Performance |
| Timeline |
| Thai Steel Cable |
| RB Food Supply |
Thai Steel and RB Food Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Thai Steel and RB Food
The main advantage of trading using opposite Thai Steel and RB Food positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Thai Steel position performs unexpectedly, RB 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 RB Food will offset losses from the drop in RB Food's 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 |
| RB Food vs. Kingsmen CMTI Public | RB Food vs. Hydrotek Public | RB Food vs. Karmarts Public | RB Food vs. KC Metalsheet 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 Price Transformation module to use Price Transformation models to analyze the depth of different equity instruments across global markets.
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