Correlation Between Chiangmai Frozen and Bangkok Union

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

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

Diversification Opportunities for Chiangmai Frozen and Bangkok Union

-0.41

Correlation Coefficient

Chiangmai Frozen  Bangkok Union

Very good diversification

The 3 months correlation between Chiangmai and Bangkok is -0.41. Overlapping area represents the amount of risk that can be diversified away by holding Chiangmai Frozen Foods and Bangkok Union Insurance in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Bangkok Union Insurance and Chiangmai Frozen 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 Chiangmai Frozen Foods are associated (or correlated) with Bangkok Union. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Bangkok Union Insurance has no effect on the direction of Chiangmai Frozen i.e., Chiangmai Frozen and Bangkok Union go up and down completely randomly.

Pair Corralation between Chiangmai Frozen and Bangkok Union

Assuming the 90 days horizon Chiangmai Frozen Foods is expected to under-perform the Bangkok Union. But the stock apears to be less risky and, when comparing its historical volatility, Chiangmai Frozen Foods is 1.26 times less risky than Bangkok Union. The stock trades about -0.2 of its potential returns per unit of risk. The Bangkok Union Insurance is currently generating about 0.36 of returns per unit of risk over similar time horizon. If you would invest  1,580  in Bangkok Union Insurance on December 22, 2024 and sell it today you would earn a total of  560.00  from holding Bangkok Union Insurance or generate 35.44% return on investment over 90 days.

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

Chiangmai Frozen Foods  vs.  Bangkok Union Insurance

Chiangmai Frozen Foods

Risk-Adjusted Performance

Very Weak

Over the last 90 days Chiangmai Frozen Foods has generated negative risk-adjusted returns adding no value to investors with long positions. Despite conflicting performance in the last few months, the Stock's fundamental drivers remain quite persistent which may send shares a bit higher in April 2025. The latest mess may also be a sign of long-standing up-swing for the company institutional investors.

Bangkok Union Insurance

Risk-Adjusted Performance

Strong

Compared to the overall equity markets, risk-adjusted returns on investments in Bangkok Union Insurance are ranked lower than 28 (%) of all global equities and portfolios over the last 90 days. Despite quite weak forward indicators, Bangkok Union disclosed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Chiangmai Frozen and Bangkok Union

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

The idea behind Chiangmai Frozen Foods and Bangkok Union Insurance 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 Stock Tickers module to use high-impact, comprehensive, and customizable stock tickers that can be easily integrated to any websites.