Correlation Between Thai Union and DOD Biotech
Can any of the company-specific risk be diversified away by investing in both Thai Union and DOD Biotech 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 Union and DOD Biotech into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Thai Union Group and DOD Biotech Public, you can compare the effects of market volatilities on Thai Union and DOD Biotech 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 Union with a short position of DOD Biotech. Check out your portfolio center. Please also check ongoing floating volatility patterns of Thai Union and DOD Biotech.
Diversification Opportunities for Thai Union and DOD Biotech
0.14 | Correlation Coefficient |
Average diversification
The 3 months correlation between Thai and DOD is 0.14. Overlapping area represents the amount of risk that can be diversified away by holding Thai Union Group and DOD Biotech Public in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on DOD Biotech Public and Thai Union 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 Union Group are associated (or correlated) with DOD Biotech. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of DOD Biotech Public has no effect on the direction of Thai Union i.e., Thai Union and DOD Biotech go up and down completely randomly.
Pair Corralation between Thai Union and DOD Biotech
Assuming the 90 days horizon Thai Union Group is expected to generate 0.54 times more return on investment than DOD Biotech. However, Thai Union Group is 1.86 times less risky than DOD Biotech. It trades about -0.28 of its potential returns per unit of risk. DOD Biotech Public is currently generating about -0.24 per unit of risk. If you would invest 1,510 in Thai Union Group on September 1, 2024 and sell it today you would lose (140.00) from holding Thai Union Group or give up 9.27% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Thai Union Group vs. DOD Biotech Public
Performance |
| Timeline |
| Thai Union Group |
| DOD Biotech Public |
Thai Union and DOD Biotech Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Thai Union and DOD Biotech
The main advantage of trading using opposite Thai Union and DOD Biotech positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Thai Union position performs unexpectedly, DOD Biotech 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 DOD Biotech will offset losses from the drop in DOD Biotech's long position.| Thai Union vs. Charoen Pokphand Foods | Thai Union vs. CP ALL Public | Thai Union vs. Minor International Public | Thai Union vs. Advanced Info Service |
| DOD Biotech vs. Carabao Group Public | DOD Biotech vs. Jay Mart Public | DOD Biotech vs. Gulf Energy Development | DOD Biotech vs. KCE Electronics 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 Portfolio Rebalancing module to analyze risk-adjusted returns against different time horizons to find asset-allocation targets.
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