Correlation Between United Palm and Thai Rayon
Can any of the company-specific risk be diversified away by investing in both United Palm and Thai Rayon 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 United Palm and Thai Rayon into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between United Palm Oil and Thai Rayon Public, you can compare the effects of market volatilities on United Palm and Thai Rayon 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 United Palm with a short position of Thai Rayon. Check out your portfolio center. Please also check ongoing floating volatility patterns of United Palm and Thai Rayon.
Diversification Opportunities for United Palm and Thai Rayon
0.21 | Correlation Coefficient |
Modest diversification
The 3 months correlation between United and Thai is 0.21. Overlapping area represents the amount of risk that can be diversified away by holding United Palm Oil and Thai Rayon Public in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Thai Rayon Public and United Palm 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 United Palm Oil are associated (or correlated) with Thai Rayon. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Thai Rayon Public has no effect on the direction of United Palm i.e., United Palm and Thai Rayon go up and down completely randomly.
Pair Corralation between United Palm and Thai Rayon
Assuming the 90 days trading horizon United Palm is expected to generate 1.07 times less return on investment than Thai Rayon. But when comparing it to its historical volatility, United Palm Oil is 1.05 times less risky than Thai Rayon. It trades about 0.04 of its potential returns per unit of risk. Thai Rayon Public is currently generating about 0.04 of returns per unit of risk over similar time horizon. If you would invest 4,814 in Thai Rayon Public on September 14, 2024 and sell it today you would lose (914.00) from holding Thai Rayon Public or give up 18.99% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 90.0% |
| Values | Daily Returns |
United Palm Oil vs. Thai Rayon Public
Performance |
| Timeline |
| United Palm Oil |
| Thai Rayon Public |
United Palm and Thai Rayon Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with United Palm and Thai Rayon
The main advantage of trading using opposite United Palm and Thai Rayon positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if United Palm position performs unexpectedly, Thai Rayon 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 Rayon will offset losses from the drop in Thai Rayon's long position.| United Palm vs. Univanich Palm Oil | United Palm vs. Chumporn Palm Oil | United Palm vs. Lam Soon Public | United Palm vs. United Paper Public |
| Thai Rayon vs. Thantawan Industry Public | Thai Rayon vs. The Erawan Group | Thai Rayon vs. Jay Mart Public | Thai Rayon vs. Airports of Thailand |
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 Dashboard module to portfolio dashboard that provides centralized access to all your investments.
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