Correlation Between Sun Vending and SET100 Index

Can any of the company-specific risk be diversified away by investing in both Sun Vending and SET100 Index 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 Sun Vending and SET100 Index into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Sun Vending Technology and SET100 Index, you can compare the effects of market volatilities on Sun Vending and SET100 Index 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 Sun Vending with a short position of SET100 Index. Check out your portfolio center. Please also check ongoing floating volatility patterns of Sun Vending and SET100 Index.

Diversification Opportunities for Sun Vending and SET100 Index

0.26

Correlation Coefficient

Sun Vending  SET100 Index

Modest diversification

The 3 months correlation between Sun and SET100 is 0.26. Overlapping area represents the amount of risk that can be diversified away by holding Sun Vending Technology and SET100 Index in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SET100 Index and Sun Vending 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 Sun Vending Technology are associated (or correlated) with SET100 Index. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of SET100 Index has no effect on the direction of Sun Vending i.e., Sun Vending and SET100 Index go up and down completely randomly.

Pair Corralation between Sun Vending and SET100 Index

Assuming the 90 days trading horizon Sun Vending Technology is expected to under-perform the SET100 Index. In addition to that, Sun Vending is 3.27 times more volatile than SET100 Index. It trades about -0.05 of its total potential returns per unit of risk. SET100 Index is currently generating about -0.02 per unit of volatility. If you would invest  203,987  in SET100 Index on October 22, 2024 and sell it today you would lose (15,649) from holding SET100 Index or give up 7.67% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	99.22%
Values	Daily Returns

Sun Vending Technology  vs.  SET100 Index

Pair Trading with Sun Vending and SET100 Index

The main advantage of trading using opposite Sun Vending and SET100 Index positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Sun Vending position performs unexpectedly, SET100 Index 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 SET100 Index will offset losses from the drop in SET100 Index's long position.

The idea behind Sun Vending Technology and SET100 Index 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 Money Managers module to screen money managers from public funds and ETFs managed around the world.