Correlation Between Thai Union and Premier Marketing
Can any of the company-specific risk be diversified away by investing in both Thai Union and Premier Marketing 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 Premier Marketing 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 Premier Marketing Public, you can compare the effects of market volatilities on Thai Union and Premier Marketing 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 Premier Marketing. Check out your portfolio center. Please also check ongoing floating volatility patterns of Thai Union and Premier Marketing.
Diversification Opportunities for Thai Union and Premier Marketing
-0.09 | Correlation Coefficient |
Good diversification
The 3 months correlation between Thai and Premier is -0.09. Overlapping area represents the amount of risk that can be diversified away by holding Thai Union Group and Premier Marketing Public in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Premier Marketing 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 Premier Marketing. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Premier Marketing Public has no effect on the direction of Thai Union i.e., Thai Union and Premier Marketing go up and down completely randomly.
Pair Corralation between Thai Union and Premier Marketing
Assuming the 90 days horizon Thai Union Group is expected to generate 35.76 times more return on investment than Premier Marketing. However, Thai Union is 35.76 times more volatile than Premier Marketing Public. It trades about 0.04 of its potential returns per unit of risk. Premier Marketing Public is currently generating about 0.02 per unit of risk. If you would invest 1,572 in Thai Union Group on August 28, 2024 and sell it today you would lose (202.00) from holding Thai Union Group or give up 12.85% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Thai Union Group vs. Premier Marketing Public
Performance |
| Timeline |
| Thai Union Group |
| Premier Marketing Public |
Thai Union and Premier Marketing Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Thai Union and Premier Marketing
The main advantage of trading using opposite Thai Union and Premier Marketing positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Thai Union position performs unexpectedly, Premier Marketing 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 Premier Marketing will offset losses from the drop in Premier Marketing'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 Global Correlations module to find global opportunities by holding instruments from different markets.
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