Correlation Between Chiangmai Frozen and Crown Seal

Can any of the company-specific risk be diversified away by investing in both Chiangmai Frozen and Crown Seal 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 Crown Seal 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 Crown Seal Public, you can compare the effects of market volatilities on Chiangmai Frozen and Crown Seal 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 Crown Seal. Check out your portfolio center. Please also check ongoing floating volatility patterns of Chiangmai Frozen and Crown Seal.

Diversification Opportunities for Chiangmai Frozen and Crown Seal

0.94

Correlation Coefficient

Chiangmai Frozen  Crown Seal

Almost no diversification

The 3 months correlation between Chiangmai and Crown is 0.94. Overlapping area represents the amount of risk that can be diversified away by holding Chiangmai Frozen Foods and Crown Seal Public in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Crown Seal Public 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 Crown Seal. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Crown Seal Public has no effect on the direction of Chiangmai Frozen i.e., Chiangmai Frozen and Crown Seal go up and down completely randomly.

Pair Corralation between Chiangmai Frozen and Crown Seal

Assuming the 90 days horizon Chiangmai Frozen is expected to generate 1.02 times less return on investment than Crown Seal. In addition to that, Chiangmai Frozen is 1.0 times more volatile than Crown Seal Public. It trades about 0.12 of its total potential returns per unit of risk. Crown Seal Public is currently generating about 0.13 per unit of volatility. If you would invest  0.00  in Crown Seal Public on September 3, 2024 and sell it today you would earn a total of  4,600  from holding Crown Seal Public or generate 9.223372036854776E16% return on investment over 90 days.

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

Chiangmai Frozen Foods  vs.  Crown Seal Public

Chiangmai Frozen Foods

Risk-Adjusted Performance

9 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Chiangmai Frozen Foods are ranked lower than 9 (%) 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.

Crown Seal Public

Risk-Adjusted Performance

9 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Crown Seal Public are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. Despite quite conflicting fundamental indicators, Crown Seal disclosed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Chiangmai Frozen and Crown Seal

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

The idea behind Chiangmai Frozen Foods and Crown Seal Public 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 Premium Stories module to follow Macroaxis premium stories from verified contributors across different equity types, categories and coverage scope.