Correlation Between Taokaenoi Food and Thai President

Can any of the company-specific risk be diversified away by investing in both Taokaenoi Food and Thai President 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 Thai President 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 Thai President Foods, you can compare the effects of market volatilities on Taokaenoi Food and Thai President 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 Thai President. Check out your portfolio center. Please also check ongoing floating volatility patterns of Taokaenoi Food and Thai President.

Diversification Opportunities for Taokaenoi Food and Thai President

-0.05

Correlation Coefficient

Taokaenoi Food  Thai President

Good diversification

The 3 months correlation between Taokaenoi and Thai is -0.05. Overlapping area represents the amount of risk that can be diversified away by holding Taokaenoi Food Marketing and Thai President Foods in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Thai President Foods 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 Thai President. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Thai President Foods has no effect on the direction of Taokaenoi Food i.e., Taokaenoi Food and Thai President go up and down completely randomly.

Pair Corralation between Taokaenoi Food and Thai President

Assuming the 90 days trading horizon Taokaenoi Food Marketing is expected to generate 4.69 times more return on investment than Thai President. However, Taokaenoi Food is 4.69 times more volatile than Thai President Foods. It trades about 0.0 of its potential returns per unit of risk. Thai President Foods is currently generating about -0.02 per unit of risk. If you would invest  835.00  in Taokaenoi Food Marketing on December 3, 2024 and sell it today you would lose (10.00) from holding Taokaenoi Food Marketing or give up 1.2% of portfolio value over 90 days.

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

Taokaenoi Food Marketing  vs.  Thai President Foods

Taokaenoi Food Marketing

Risk-Adjusted Performance

Weak

Over the last 90 days Taokaenoi Food Marketing has generated negative risk-adjusted returns adding no value to investors with long positions. 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.

Thai President Foods

Risk-Adjusted Performance

Very Weak

Over the last 90 days Thai President Foods has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong primary indicators, Thai President is not utilizing all of its potentials. The latest stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Taokaenoi Food and Thai President

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

The idea behind Taokaenoi Food Marketing and Thai President 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 Comparator module to compare the composition, asset allocations and performance of any two portfolios in your account.