Correlation Between Taokaenoi Food and Thaifoods Group

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

By analyzing existing cross correlation between Taokaenoi Food Marketing and Thaifoods Group Public, you can compare the effects of market volatilities on Taokaenoi Food and Thaifoods Group 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 Taokaenoi Food with a short position of Thaifoods Group. Check out your portfolio center. Please also check ongoing floating volatility patterns of Taokaenoi Food and Thaifoods Group.

Diversification Opportunities for Taokaenoi Food and Thaifoods Group

0.2

Correlation Coefficient

Taokaenoi Food  Thaifoods Group

Modest diversification

The 3 months correlation between Taokaenoi and Thaifoods is 0.2. Overlapping area represents the amount of risk that can be diversified away by holding Taokaenoi Food Marketing and Thaifoods Group Public in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Thaifoods Group Public and Taokaenoi 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 Taokaenoi Food Marketing are associated (or correlated) with Thaifoods Group. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Thaifoods Group Public has no effect on the direction of Taokaenoi Food i.e., Taokaenoi Food and Thaifoods Group go up and down completely randomly.

Pair Corralation between Taokaenoi Food and Thaifoods Group

Assuming the 90 days trading horizon Taokaenoi Food Marketing is expected to generate 0.78 times more return on investment than Thaifoods Group. However, Taokaenoi Food Marketing is 1.29 times less risky than Thaifoods Group. It trades about 0.03 of its potential returns per unit of risk. Thaifoods Group Public is currently generating about 0.02 per unit of risk. If you would invest  820.00  in Taokaenoi Food Marketing on December 2, 2024 and sell it today you would earn a total of  20.00  from holding Taokaenoi Food Marketing or generate 2.44% return on investment over 90 days.

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

Taokaenoi Food Marketing  vs.  Thaifoods Group Public

Taokaenoi Food Marketing

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Taokaenoi Food Marketing are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. Despite quite persistent basic indicators, Taokaenoi Food is not utilizing all of its potentials. The current stock price mess, may contribute to short-term losses for the institutional investors.

Thaifoods Group Public

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Thaifoods Group Public are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. Despite quite persistent technical and fundamental indicators, Thaifoods Group is not utilizing all of its potentials. The latest stock price mess, may contribute to short-term losses for the institutional investors.

Pair Trading with Taokaenoi Food and Thaifoods Group

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

The idea behind Taokaenoi Food Marketing and Thaifoods Group 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 Portfolio Optimization module to compute new portfolio that will generate highest expected return given your specified tolerance for risk.