Correlation Between Chiangmai Frozen and SCB X

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

Diversification Opportunities for Chiangmai Frozen and SCB X

-0.85

Correlation Coefficient

Chiangmai Frozen  SCB X

Pay attention - limited upside

The 3 months correlation between Chiangmai and SCB is -0.85. Overlapping area represents the amount of risk that can be diversified away by holding Chiangmai Frozen Foods and SCB X Public in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SCB X 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 SCB X. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of SCB X Public has no effect on the direction of Chiangmai Frozen i.e., Chiangmai Frozen and SCB X go up and down completely randomly.

Pair Corralation between Chiangmai Frozen and SCB X

Assuming the 90 days horizon Chiangmai Frozen Foods is expected to under-perform the SCB X. But the stock apears to be less risky and, when comparing its historical volatility, Chiangmai Frozen Foods is 1.15 times less risky than SCB X. The stock trades about -0.14 of its potential returns per unit of risk. The SCB X Public is currently generating about -0.02 of returns per unit of risk over similar time horizon. If you would invest  11,850  in SCB X Public on October 8, 2024 and sell it today you would lose (50.00) from holding SCB X Public or give up 0.42% of portfolio value over 90 days.

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

Chiangmai Frozen Foods  vs.  SCB X Public

Chiangmai Frozen Foods

Risk-Adjusted Performance

0 of 100

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 latest conflicting performance, the Stock's fundamental drivers remain persistent and the latest mess on Wall Street may also be a sign of long-standing gains for the company institutional investors.

SCB X Public

Risk-Adjusted Performance

10 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in SCB X Public are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. Despite quite conflicting fundamental drivers, SCB X may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Pair Trading with Chiangmai Frozen and SCB X

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

The idea behind Chiangmai Frozen Foods and SCB X 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 Analyst Advice module to analyst recommendations and target price estimates broken down by several categories.