Correlation Between Thai Union and Thai Vegetable
Can any of the company-specific risk be diversified away by investing in both Thai Union and Thai Vegetable 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 Thai Vegetable 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 Thai Vegetable Oil, you can compare the effects of market volatilities on Thai Union and Thai Vegetable 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 Thai Vegetable. Check out your portfolio center. Please also check ongoing floating volatility patterns of Thai Union and Thai Vegetable.
Diversification Opportunities for Thai Union and Thai Vegetable
0.17 | Correlation Coefficient |
Average diversification
The 3 months correlation between Thai and Thai is 0.17. Overlapping area represents the amount of risk that can be diversified away by holding Thai Union Group and Thai Vegetable Oil in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Thai Vegetable Oil 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 Thai Vegetable. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Thai Vegetable Oil has no effect on the direction of Thai Union i.e., Thai Union and Thai Vegetable go up and down completely randomly.
Pair Corralation between Thai Union and Thai Vegetable
Assuming the 90 days horizon Thai Union Group is expected to under-perform the Thai Vegetable. In addition to that, Thai Union is 1.48 times more volatile than Thai Vegetable Oil. It trades about -0.32 of its total potential returns per unit of risk. Thai Vegetable Oil is currently generating about -0.24 per unit of volatility. If you would invest 2,450 in Thai Vegetable Oil on August 28, 2024 and sell it today you would lose (120.00) from holding Thai Vegetable Oil or give up 4.9% 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. Thai Vegetable Oil
Performance |
| Timeline |
| Thai Union Group |
| Thai Vegetable Oil |
Thai Union and Thai Vegetable Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Thai Union and Thai Vegetable
The main advantage of trading using opposite Thai Union and Thai Vegetable positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Thai Union position performs unexpectedly, Thai Vegetable 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 Thai Vegetable will offset losses from the drop in Thai Vegetable'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 Price Transformation module to use Price Transformation models to analyze the depth of different equity instruments across global markets.
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