Correlation Between Khon Kaen and IRPC Public

Can any of the company-specific risk be diversified away by investing in both Khon Kaen and IRPC Public 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 Khon Kaen and IRPC Public into the same portfolio, which is an essential part of the fundamental portfolio management process.

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

Diversification Opportunities for Khon Kaen and IRPC Public

0.94

Correlation Coefficient

Khon Kaen  IRPC Public

Almost no diversification

The 3 months correlation between Khon and IRPC is 0.94. Overlapping area represents the amount of risk that can be diversified away by holding Khon Kaen Sugar and IRPC Public in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on IRPC Public and Khon Kaen 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 Khon Kaen Sugar are associated (or correlated) with IRPC Public. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of IRPC Public has no effect on the direction of Khon Kaen i.e., Khon Kaen and IRPC Public go up and down completely randomly.

Pair Corralation between Khon Kaen and IRPC Public

Assuming the 90 days trading horizon Khon Kaen Sugar is expected to generate 0.63 times more return on investment than IRPC Public. However, Khon Kaen Sugar is 1.59 times less risky than IRPC Public. It trades about -0.04 of its potential returns per unit of risk. IRPC Public is currently generating about -0.06 per unit of risk. If you would invest  210.00  in Khon Kaen Sugar on September 5, 2024 and sell it today you would lose (11.00) from holding Khon Kaen Sugar or give up 5.24% of portfolio value over 90 days.

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

Khon Kaen Sugar  vs.  IRPC Public

Khon Kaen Sugar

Risk-Adjusted Performance

0 of 100

Very Weak

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

IRPC Public

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days IRPC Public has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest weak performance, the Stock's forward-looking signals remain persistent and the latest mess on Wall Street may also be a sign of long-standing gains for the company institutional investors.

Pair Trading with Khon Kaen and IRPC Public

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

The idea behind Khon Kaen Sugar and IRPC 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 Sectors module to list of equity sectors categorizing publicly traded companies based on their primary business activities.