Correlation Between Thai Union and Exotic Food
Can any of the company-specific risk be diversified away by investing in both Thai Union and Exotic 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 Union and Exotic Food 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 Exotic Food Public, you can compare the effects of market volatilities on Thai Union and Exotic 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 Union with a short position of Exotic Food. Check out your portfolio center. Please also check ongoing floating volatility patterns of Thai Union and Exotic Food.
Diversification Opportunities for Thai Union and Exotic Food
0.77 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Thai and Exotic is 0.77. Overlapping area represents the amount of risk that can be diversified away by holding Thai Union Group and Exotic Food Public in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Exotic Food 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 Exotic Food. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Exotic Food Public has no effect on the direction of Thai Union i.e., Thai Union and Exotic Food go up and down completely randomly.
Pair Corralation between Thai Union and Exotic Food
Assuming the 90 days horizon Thai Union Group is expected to under-perform the Exotic Food. But the stock apears to be less risky and, when comparing its historical volatility, Thai Union Group is 1.71 times less risky than Exotic Food. The stock trades about -0.17 of its potential returns per unit of risk. The Exotic Food Public is currently generating about -0.08 of returns per unit of risk over similar time horizon. If you would invest 2,030 in Exotic Food Public on October 23, 2024 and sell it today you would lose (240.00) from holding Exotic Food Public or give up 11.82% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Thai Union Group vs. Exotic Food Public
Performance |
| Timeline |
| Thai Union Group |
| Exotic Food Public |
Thai Union and Exotic Food Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Thai Union and Exotic Food
The main advantage of trading using opposite Thai Union and Exotic Food positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Thai Union position performs unexpectedly, Exotic 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 Exotic Food will offset losses from the drop in Exotic Food'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 |
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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 Bond Analysis module to evaluate and analyze corporate bonds as a potential investment for your portfolios..
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