Correlation Between Thai Union and Lam Soon
Can any of the company-specific risk be diversified away by investing in both Thai Union and Lam Soon 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 Lam Soon 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 Lam Soon Public, you can compare the effects of market volatilities on Thai Union and Lam Soon 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 Lam Soon. Check out your portfolio center. Please also check ongoing floating volatility patterns of Thai Union and Lam Soon.
Diversification Opportunities for Thai Union and Lam Soon
0.94 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between Thai and Lam is 0.94. Overlapping area represents the amount of risk that can be diversified away by holding Thai Union Group and Lam Soon Public in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Lam Soon 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 Lam Soon. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Lam Soon Public has no effect on the direction of Thai Union i.e., Thai Union and Lam Soon go up and down completely randomly.
Pair Corralation between Thai Union and Lam Soon
Assuming the 90 days horizon Thai Union Group is expected to under-perform the Lam Soon. In addition to that, Thai Union is 1.3 times more volatile than Lam Soon Public. It trades about -0.32 of its total potential returns per unit of risk. Lam Soon Public is currently generating about 0.13 per unit of volatility. If you would invest 486.00 in Lam Soon Public on August 28, 2024 and sell it today you would earn a total of 14.00 from holding Lam Soon Public or generate 2.88% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Thai Union Group vs. Lam Soon Public
Performance |
| Timeline |
| Thai Union Group |
| Lam Soon Public |
Thai Union and Lam Soon Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Thai Union and Lam Soon
The main advantage of trading using opposite Thai Union and Lam Soon positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Thai Union position performs unexpectedly, Lam Soon 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 Lam Soon will offset losses from the drop in Lam Soon'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 |
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 Suggestion module to get suggestions outside of your existing asset allocation including your own model portfolios.
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