Correlation Between RB Food and S Khonkaen

Can any of the company-specific risk be diversified away by investing in both RB Food 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 RB Food and S Khonkaen 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 S Khonkaen Foods, you can compare the effects of market volatilities on RB Food 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 RB Food with a short position of S Khonkaen. Check out your portfolio center. Please also check ongoing floating volatility patterns of RB Food and S Khonkaen.

Diversification Opportunities for RB Food and S Khonkaen

-0.75

Correlation Coefficient

RB Food  S Khonkaen

Pay attention - limited upside

The 3 months correlation between RBF and SORKON is -0.75. Overlapping area represents the amount of risk that can be diversified away by holding RB Food Supply 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 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 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 RB Food i.e., RB Food and S Khonkaen go up and down completely randomly.

Pair Corralation between RB Food and S Khonkaen

Assuming the 90 days trading horizon RB Food Supply is expected to generate 5.13 times more return on investment than S Khonkaen. However, RB Food is 5.13 times more volatile than S Khonkaen Foods. It trades about 0.05 of its potential returns per unit of risk. S Khonkaen Foods is currently generating about -0.04 per unit of risk. If you would invest  700.00  in RB Food Supply on October 10, 2024 and sell it today you would earn a total of  15.00  from holding RB Food Supply or generate 2.14% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Weak
Accuracy	95.0%
Values	Daily Returns

RB Food Supply  vs.  S Khonkaen Foods

RB Food Supply

Risk-Adjusted Performance

9 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in RB Food Supply are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. Despite quite conflicting technical and fundamental indicators, RB Food disclosed solid returns over the last few months and may actually be approaching a breakup point.

S Khonkaen Foods

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days S Khonkaen Foods has generated negative risk-adjusted returns adding no value to investors with long positions. 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 RB Food and S Khonkaen

The main advantage of trading using opposite RB Food and S Khonkaen positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if RB Food 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 RB Food Supply 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.

Check out your portfolio center.

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 Optimization module to compute new portfolio that will generate highest expected return given your specified tolerance for risk.