Correlation Between Home Product and S Khonkaen

Can any of the company-specific risk be diversified away by investing in both Home Product and S Khonkaen 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 Home Product and S Khonkaen into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Home Product Center and S Khonkaen Foods, you can compare the effects of market volatilities on Home Product and S Khonkaen 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 Home Product with a short position of S Khonkaen. Check out your portfolio center. Please also check ongoing floating volatility patterns of Home Product and S Khonkaen.

Diversification Opportunities for Home Product and S Khonkaen

-0.22

Correlation Coefficient

Home Product  S Khonkaen

Very good diversification

The 3 months correlation between Home and SORKON is -0.22. Overlapping area represents the amount of risk that can be diversified away by holding Home Product Center and S Khonkaen Foods in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on S Khonkaen Foods and Home Product 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 Home Product Center are associated (or correlated) with S Khonkaen. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of S Khonkaen Foods has no effect on the direction of Home Product i.e., Home Product and S Khonkaen go up and down completely randomly.

Pair Corralation between Home Product and S Khonkaen

Assuming the 90 days trading horizon Home Product Center is expected to under-perform the S Khonkaen. In addition to that, Home Product is 2.73 times more volatile than S Khonkaen Foods. It trades about -0.07 of its total potential returns per unit of risk. S Khonkaen Foods is currently generating about 0.08 per unit of volatility. If you would invest  422.00  in S Khonkaen Foods on December 22, 2024 and sell it today you would earn a total of  20.00  from holding S Khonkaen Foods or generate 4.74% return on investment over 90 days.

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

Home Product Center  vs.  S Khonkaen Foods

Home Product Center

Risk-Adjusted Performance

Very Weak

Over the last 90 days Home Product Center has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest weak performance, the Stock's fundamental drivers remain strong and the current disturbance on Wall Street may also be a sign of long term gains for the company investors.

S Khonkaen Foods

Risk-Adjusted Performance

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in S Khonkaen Foods are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. Despite somewhat strong basic indicators, S Khonkaen is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Home Product and S Khonkaen

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

The idea behind Home Product Center and S Khonkaen Foods 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 File Import module to quickly import all of your third-party portfolios from your local drive in csv format.