Correlation Between CP ALL and Thai Vegetable

Can any of the company-specific risk be diversified away by investing in both CP ALL and Thai Vegetable 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 CP ALL and Thai Vegetable into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between CP ALL Public and Thai Vegetable Oil, you can compare the effects of market volatilities on CP ALL and Thai Vegetable 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 CP ALL with a short position of Thai Vegetable. Check out your portfolio center. Please also check ongoing floating volatility patterns of CP ALL and Thai Vegetable.

Diversification Opportunities for CP ALL and Thai Vegetable

0.67

Correlation Coefficient

CP ALL  Thai Vegetable

Poor diversification

The 3 months correlation between CPALL and Thai is 0.67. Overlapping area represents the amount of risk that can be diversified away by holding CP ALL Public and Thai Vegetable Oil in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Thai Vegetable Oil and CP ALL 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 CP ALL Public are associated (or correlated) with Thai Vegetable. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Thai Vegetable Oil has no effect on the direction of CP ALL i.e., CP ALL and Thai Vegetable go up and down completely randomly.

Pair Corralation between CP ALL and Thai Vegetable

Assuming the 90 days trading horizon CP ALL Public is expected to under-perform the Thai Vegetable. In addition to that, CP ALL is 1.88 times more volatile than Thai Vegetable Oil. It trades about -0.03 of its total potential returns per unit of risk. Thai Vegetable Oil is currently generating about 0.0 per unit of volatility. If you would invest  2,260  in Thai Vegetable Oil on December 1, 2024 and sell it today you would lose (20.00) from holding Thai Vegetable Oil or give up 0.88% of portfolio value over 90 days.

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

CP ALL Public  vs.  Thai Vegetable Oil

CP ALL Public

Risk-Adjusted Performance

Very Weak

Over the last 90 days CP ALL Public 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 somewhat strong which may send shares a bit higher in April 2025. The current disturbance may also be a sign of long term up-swing for the company investors.

Thai Vegetable Oil

Risk-Adjusted Performance

Very Weak

Over the last 90 days Thai Vegetable Oil has generated negative risk-adjusted returns adding no value to investors with long positions. Despite quite persistent basic indicators, Thai Vegetable is not utilizing all of its potentials. The latest stock price mess, may contribute to short-term losses for the institutional investors.

Pair Trading with CP ALL and Thai Vegetable

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

The idea behind CP ALL Public and Thai Vegetable Oil 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 Portfolio Dashboard module to portfolio dashboard that provides centralized access to all your investments.