Correlation Between RB Food and CIMB Thai

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

By analyzing existing cross correlation between RB Food Supply and CIMB Thai Bank, you can compare the effects of market volatilities on RB Food and CIMB Thai 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 RB Food with a short position of CIMB Thai. Check out your portfolio center. Please also check ongoing floating volatility patterns of RB Food and CIMB Thai.

Diversification Opportunities for RB Food and CIMB Thai

-0.73

Correlation Coefficient

RB Food  CIMB Thai

Pay attention - limited upside

The 3 months correlation between RBF and CIMB is -0.73. Overlapping area represents the amount of risk that can be diversified away by holding RB Food Supply and CIMB Thai Bank in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on CIMB Thai Bank and RB Food 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 RB Food Supply are associated (or correlated) with CIMB Thai. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of CIMB Thai Bank has no effect on the direction of RB Food i.e., RB Food and CIMB Thai go up and down completely randomly.

Pair Corralation between RB Food and CIMB Thai

Assuming the 90 days trading horizon RB Food Supply is expected to under-perform the CIMB Thai. But the stock apears to be less risky and, when comparing its historical volatility, RB Food Supply is 1.22 times less risky than CIMB Thai. The stock trades about -0.25 of its potential returns per unit of risk. The CIMB Thai Bank is currently generating about 0.22 of returns per unit of risk over similar time horizon. If you would invest  45.00  in CIMB Thai Bank on December 28, 2024 and sell it today you would earn a total of  22.00  from holding CIMB Thai Bank or generate 48.89% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Weak
Accuracy	98.39%
Values	Daily Returns

RB Food Supply  vs.  CIMB Thai Bank

RB Food Supply

Risk-Adjusted Performance

Very Weak

Over the last 90 days RB Food Supply 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 technical and fundamental indicators remain quite persistent which may send shares a bit higher in April 2025. The latest mess may also be a sign of long-standing up-swing for the company institutional investors.

CIMB Thai Bank

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in CIMB Thai Bank are ranked lower than 17 (%) of all global equities and portfolios over the last 90 days. Despite somewhat conflicting fundamental drivers, CIMB Thai sustained solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with RB Food and CIMB Thai

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

The idea behind RB Food Supply and CIMB Thai Bank 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 Positions Ratings module to determine portfolio positions ratings based on digital equity recommendations. Macroaxis instant position ratings are based on combination of fundamental analysis and risk-adjusted market performance.