Correlation Between MK Restaurant and Thai Union

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

By analyzing existing cross correlation between MK Restaurant Group and Thai Union Group, you can compare the effects of market volatilities on MK Restaurant and Thai Union 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 MK Restaurant with a short position of Thai Union. Check out your portfolio center. Please also check ongoing floating volatility patterns of MK Restaurant and Thai Union.

Diversification Opportunities for MK Restaurant and Thai Union

0.85

Correlation Coefficient

MK Restaurant  Thai Union

Very poor diversification

The 3 months correlation between MK Restaurant and Thai is 0.85. Overlapping area represents the amount of risk that can be diversified away by holding MK Restaurant Group and Thai Union Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Thai Union Group and MK Restaurant 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 MK Restaurant Group are associated (or correlated) with Thai Union. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Thai Union Group has no effect on the direction of MK Restaurant i.e., MK Restaurant and Thai Union go up and down completely randomly.

Pair Corralation between MK Restaurant and Thai Union

Given the investment horizon of 90 days MK Restaurant Group is expected to under-perform the Thai Union. In addition to that, MK Restaurant is 1.14 times more volatile than Thai Union Group. It trades about -0.23 of its total potential returns per unit of risk. Thai Union Group is currently generating about -0.1 per unit of volatility. If you would invest  1,350  in Thai Union Group on November 20, 2024 and sell it today you would lose (160.00) from holding Thai Union Group or give up 11.85% of portfolio value over 90 days.

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

MK Restaurant Group  vs.  Thai Union Group

MK Restaurant Group

Risk-Adjusted Performance

Very Weak

Over the last 90 days MK Restaurant Group 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 quite persistent which may send shares a bit higher in March 2025. The latest mess may also be a sign of long-standing up-swing for the company institutional investors.

Thai Union Group

Risk-Adjusted Performance

Very Weak

Over the last 90 days Thai Union Group has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest conflicting performance, the Stock's fundamental drivers 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 MK Restaurant and Thai Union

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

The idea behind MK Restaurant Group and Thai Union Group 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.