Correlation Between Stock Exchange and Chiangmai Frozen

Can any of the company-specific risk be diversified away by investing in both Stock Exchange and Chiangmai Frozen 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 Stock Exchange and Chiangmai Frozen into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Stock Exchange Of and Chiangmai Frozen Foods, you can compare the effects of market volatilities on Stock Exchange and Chiangmai Frozen 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 Stock Exchange with a short position of Chiangmai Frozen. Check out your portfolio center. Please also check ongoing floating volatility patterns of Stock Exchange and Chiangmai Frozen.

Diversification Opportunities for Stock Exchange and Chiangmai Frozen

0.71

Correlation Coefficient

Stock Exchange  Chiangmai Frozen

Poor diversification

The 3 months correlation between Stock and Chiangmai is 0.71. Overlapping area represents the amount of risk that can be diversified away by holding Stock Exchange Of and Chiangmai Frozen Foods in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Chiangmai Frozen Foods and Stock Exchange 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 Stock Exchange Of are associated (or correlated) with Chiangmai Frozen. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Chiangmai Frozen Foods has no effect on the direction of Stock Exchange i.e., Stock Exchange and Chiangmai Frozen go up and down completely randomly.

Pair Corralation between Stock Exchange and Chiangmai Frozen

Assuming the 90 days trading horizon Stock Exchange Of is expected to under-perform the Chiangmai Frozen. But the index apears to be less risky and, when comparing its historical volatility, Stock Exchange Of is 60.4 times less risky than Chiangmai Frozen. The index trades about -0.06 of its potential returns per unit of risk. The Chiangmai Frozen Foods is currently generating about 0.04 of returns per unit of risk over similar time horizon. If you would invest  240.00  in Chiangmai Frozen Foods on November 21, 2024 and sell it today you would lose (68.00) from holding Chiangmai Frozen Foods or give up 28.33% of portfolio value over 90 days.

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

Stock Exchange Of  vs.  Chiangmai Frozen Foods

Pair Trading with Stock Exchange and Chiangmai Frozen

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

The idea behind Stock Exchange Of and Chiangmai Frozen 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 Technical Analysis module to check basic technical indicators and analysis based on most latest market data.