Correlation Between Thai Vegetable and RB Food
Can any of the company-specific risk be diversified away by investing in both Thai Vegetable and RB 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 Vegetable and RB Food into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Thai Vegetable Oil and RB Food Supply, you can compare the effects of market volatilities on Thai Vegetable and RB 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 Vegetable with a short position of RB Food. Check out your portfolio center. Please also check ongoing floating volatility patterns of Thai Vegetable and RB Food.
Diversification Opportunities for Thai Vegetable and RB Food
-0.04 | Correlation Coefficient |
Good diversification
The 3 months correlation between Thai and RBF is -0.04. Overlapping area represents the amount of risk that can be diversified away by holding Thai Vegetable Oil and RB Food Supply in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on RB Food Supply and Thai Vegetable 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 Vegetable Oil are associated (or correlated) with RB Food. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of RB Food Supply has no effect on the direction of Thai Vegetable i.e., Thai Vegetable and RB Food go up and down completely randomly.
Pair Corralation between Thai Vegetable and RB Food
Assuming the 90 days trading horizon Thai Vegetable Oil is expected to under-perform the RB Food. But the stock apears to be less risky and, when comparing its historical volatility, Thai Vegetable Oil is 2.23 times less risky than RB Food. The stock trades about -0.3 of its potential returns per unit of risk. The RB Food Supply is currently generating about 0.36 of returns per unit of risk over similar time horizon. If you would invest 540.00 in RB Food Supply on September 12, 2024 and sell it today you would earn a total of 145.00 from holding RB Food Supply or generate 26.85% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Thai Vegetable Oil vs. RB Food Supply
Performance |
| Timeline |
| Thai Vegetable Oil |
| RB Food Supply |
Thai Vegetable and RB Food Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Thai Vegetable and RB Food
The main advantage of trading using opposite Thai Vegetable and RB Food positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Thai Vegetable position performs unexpectedly, RB 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 RB Food will offset losses from the drop in RB Food's long position.| Thai Vegetable vs. Thai Union Group | Thai Vegetable vs. Charoen Pokphand Foods | Thai Vegetable vs. CP ALL Public | Thai Vegetable vs. Intouch Holdings Public |
| RB Food vs. Thai Union Group | RB Food vs. Thai Union Group | RB Food vs. Thai President Foods | RB Food vs. Thai Vegetable Oil |
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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