Correlation Between DTC Industries and Surapon Foods

Can any of the company-specific risk be diversified away by investing in both DTC Industries and Surapon Foods 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 DTC Industries and Surapon Foods into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between DTC Industries Public and Surapon Foods Public, you can compare the effects of market volatilities on DTC Industries and Surapon Foods 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 DTC Industries with a short position of Surapon Foods. Check out your portfolio center. Please also check ongoing floating volatility patterns of DTC Industries and Surapon Foods.

Diversification Opportunities for DTC Industries and Surapon Foods

-0.16

Correlation Coefficient

DTC Industries  Surapon Foods

Good diversification

The 3 months correlation between DTC and Surapon is -0.16. Overlapping area represents the amount of risk that can be diversified away by holding DTC Industries Public and Surapon Foods Public in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Surapon Foods Public and DTC Industries 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 DTC Industries Public are associated (or correlated) with Surapon Foods. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Surapon Foods Public has no effect on the direction of DTC Industries i.e., DTC Industries and Surapon Foods go up and down completely randomly.

Pair Corralation between DTC Industries and Surapon Foods

Assuming the 90 days trading horizon DTC Industries Public is expected to under-perform the Surapon Foods. In addition to that, DTC Industries is 4.13 times more volatile than Surapon Foods Public. It trades about -0.04 of its total potential returns per unit of risk. Surapon Foods Public is currently generating about -0.15 per unit of volatility. If you would invest  695.00  in Surapon Foods Public on October 9, 2024 and sell it today you would lose (35.00) from holding Surapon Foods Public or give up 5.04% of portfolio value over 90 days.

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

DTC Industries Public  vs.  Surapon Foods Public

DTC Industries Public

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days DTC Industries 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 forward-looking signals 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.

Surapon Foods Public

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Surapon Foods Public has generated negative risk-adjusted returns adding no value to investors with long positions. Despite quite persistent technical and fundamental indicators, Surapon Foods 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 DTC Industries and Surapon Foods

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

The idea behind DTC Industries Public and Surapon Foods 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 Equity Forecasting module to use basic forecasting models to generate price predictions and determine price momentum.