Correlation Between AP Public and Chiangmai Frozen

Can any of the company-specific risk be diversified away by investing in both AP Public and Chiangmai Frozen 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 AP Public and Chiangmai Frozen into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between AP Public and Chiangmai Frozen Foods, you can compare the effects of market volatilities on AP Public and Chiangmai Frozen 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 AP Public with a short position of Chiangmai Frozen. Check out your portfolio center. Please also check ongoing floating volatility patterns of AP Public and Chiangmai Frozen.

Diversification Opportunities for AP Public and Chiangmai Frozen

0.27

Correlation Coefficient

AP Public  Chiangmai Frozen

Modest diversification

The 3 months correlation between AP Public and Chiangmai is 0.27. Overlapping area represents the amount of risk that can be diversified away by holding AP Public and Chiangmai Frozen Foods in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Chiangmai Frozen Foods and AP Public 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 AP Public are associated (or correlated) with Chiangmai Frozen. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Chiangmai Frozen Foods has no effect on the direction of AP Public i.e., AP Public and Chiangmai Frozen go up and down completely randomly.

Pair Corralation between AP Public and Chiangmai Frozen

Assuming the 90 days horizon AP Public is expected to generate 192.9 times less return on investment than Chiangmai Frozen. But when comparing it to its historical volatility, AP Public is 67.76 times less risky than Chiangmai Frozen. It trades about 0.04 of its potential returns per unit of risk. Chiangmai Frozen Foods is currently generating about 0.11 of returns per unit of risk over similar time horizon. If you would invest  230.00  in Chiangmai Frozen Foods on September 1, 2024 and sell it today you would lose (28.00) from holding Chiangmai Frozen Foods or give up 12.17% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	100.0%
Values	Daily Returns

AP Public  vs.  Chiangmai Frozen Foods

AP Public

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in AP Public are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. Despite quite persistent fundamental drivers, AP Public is not utilizing all of its potentials. The latest stock price mess, may contribute to short-term losses for the institutional investors.

Chiangmai Frozen Foods

Risk-Adjusted Performance

8 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Chiangmai Frozen Foods are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. Despite quite conflicting fundamental drivers, Chiangmai Frozen disclosed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with AP Public and Chiangmai Frozen

The main advantage of trading using opposite AP Public and Chiangmai Frozen positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if AP Public position performs unexpectedly, Chiangmai Frozen 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 Chiangmai Frozen will offset losses from the drop in Chiangmai Frozen's long position.

The idea behind AP Public and Chiangmai Frozen Foods pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.

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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 Sectors module to list of equity sectors categorizing publicly traded companies based on their primary business activities.