Correlation Between Chiangmai Frozen and Trinity Watthana

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

Diversification Opportunities for Chiangmai Frozen and Trinity Watthana

0.37

Correlation Coefficient

Chiangmai Frozen  Trinity Watthana

Weak diversification

The 3 months correlation between Chiangmai and Trinity is 0.37. Overlapping area represents the amount of risk that can be diversified away by holding Chiangmai Frozen Foods and Trinity Watthana Public in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Trinity Watthana 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 Trinity Watthana. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Trinity Watthana Public has no effect on the direction of Chiangmai Frozen i.e., Chiangmai Frozen and Trinity Watthana go up and down completely randomly.

Pair Corralation between Chiangmai Frozen and Trinity Watthana

Assuming the 90 days horizon Chiangmai Frozen Foods is expected to under-perform the Trinity Watthana. But the stock apears to be less risky and, when comparing its historical volatility, Chiangmai Frozen Foods is 2.86 times less risky than Trinity Watthana. The stock trades about -0.28 of its potential returns per unit of risk. The Trinity Watthana Public is currently generating about -0.01 of returns per unit of risk over similar time horizon. If you would invest  368.00  in Trinity Watthana Public on October 26, 2024 and sell it today you would lose (18.00) from holding Trinity Watthana Public or give up 4.89% of portfolio value over 90 days.

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

Chiangmai Frozen Foods  vs.  Trinity Watthana 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 weak performance in the last few months, the Stock's fundamental drivers remain quite persistent which may send shares a bit higher in February 2025. The latest mess may also be a sign of long-standing up-swing for the company institutional investors.

Trinity Watthana Public

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Trinity Watthana Public has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong fundamental drivers, Trinity Watthana is not utilizing all of its potentials. The latest stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Chiangmai Frozen and Trinity Watthana

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

The idea behind Chiangmai Frozen Foods and Trinity Watthana 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 FinTech Suite module to use AI to screen and filter profitable investment opportunities.