Correlation Between S Khonkaen and Tropical Canning

Can any of the company-specific risk be diversified away by investing in both S Khonkaen and Tropical Canning 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 S Khonkaen and Tropical Canning into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between S Khonkaen Foods and Tropical Canning Public, you can compare the effects of market volatilities on S Khonkaen and Tropical Canning 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 S Khonkaen with a short position of Tropical Canning. Check out your portfolio center. Please also check ongoing floating volatility patterns of S Khonkaen and Tropical Canning.

Diversification Opportunities for S Khonkaen and Tropical Canning

0.84

Correlation Coefficient

S Khonkaen  Tropical Canning

Very poor diversification

The 3 months correlation between SORKON and Tropical is 0.84. Overlapping area represents the amount of risk that can be diversified away by holding S Khonkaen Foods and Tropical Canning Public in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Tropical Canning Public and S Khonkaen 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 S Khonkaen Foods are associated (or correlated) with Tropical Canning. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Tropical Canning Public has no effect on the direction of S Khonkaen i.e., S Khonkaen and Tropical Canning go up and down completely randomly.

Pair Corralation between S Khonkaen and Tropical Canning

Assuming the 90 days trading horizon S Khonkaen Foods is expected to generate 0.39 times more return on investment than Tropical Canning. However, S Khonkaen Foods is 2.54 times less risky than Tropical Canning. It trades about -0.05 of its potential returns per unit of risk. Tropical Canning Public is currently generating about -0.09 per unit of risk. If you would invest  438.00  in S Khonkaen Foods on October 7, 2024 and sell it today you would lose (10.00) from holding S Khonkaen Foods or give up 2.28% of portfolio value over 90 days.

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

S Khonkaen Foods  vs.  Tropical Canning Public

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.

Tropical Canning Public

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Tropical Canning Public 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 S Khonkaen and Tropical Canning

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

The idea behind S Khonkaen Foods and Tropical Canning 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 Odds Of Bankruptcy module to get analysis of equity chance of financial distress in the next 2 years.