Correlation Between Thai Vegetable and Tropical Canning
Can any of the company-specific risk be diversified away by investing in both Thai Vegetable and Tropical Canning 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 Tropical Canning 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 Tropical Canning Public, you can compare the effects of market volatilities on Thai Vegetable and Tropical Canning 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 Tropical Canning. Check out your portfolio center. Please also check ongoing floating volatility patterns of Thai Vegetable and Tropical Canning.
Diversification Opportunities for Thai Vegetable and Tropical Canning
0.33 | Correlation Coefficient |
Weak diversification
The 3 months correlation between Thai and Tropical is 0.33. Overlapping area represents the amount of risk that can be diversified away by holding Thai Vegetable Oil and Tropical Canning Public in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Tropical Canning Public 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 Tropical Canning. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Tropical Canning Public has no effect on the direction of Thai Vegetable i.e., Thai Vegetable and Tropical Canning go up and down completely randomly.
Pair Corralation between Thai Vegetable and Tropical Canning
Assuming the 90 days trading horizon Thai Vegetable Oil is expected to generate 0.55 times more return on investment than Tropical Canning. However, Thai Vegetable Oil is 1.83 times less risky than Tropical Canning. It trades about -0.26 of its potential returns per unit of risk. Tropical Canning Public is currently generating about -0.39 per unit of risk. If you would invest 2,460 in Thai Vegetable Oil on August 26, 2024 and sell it today you would lose (130.00) from holding Thai Vegetable Oil or give up 5.28% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Thai Vegetable Oil vs. Tropical Canning Public
Performance |
| Timeline |
| Thai Vegetable Oil |
| Tropical Canning Public |
Thai Vegetable and Tropical Canning Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Thai Vegetable and Tropical Canning
The main advantage of trading using opposite Thai Vegetable and Tropical Canning positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Thai Vegetable position performs unexpectedly, Tropical Canning 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 Tropical Canning will offset losses from the drop in Tropical Canning's long position.| Thai Vegetable vs. Thai Union Group | Thai Vegetable vs. Minor International Public | Thai Vegetable vs. Central Pattana Public |
| Tropical Canning vs. Thai Vegetable Oil | Tropical Canning vs. Tipco Foods Public | Tropical Canning vs. Haad Thip Public | Tropical Canning vs. SP Syndicate Public |
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 Comparator module to compare the composition, asset allocations and performance of any two portfolios in your account.
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