Correlation Between TMT Steel and Thaifoods Group

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

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

Diversification Opportunities for TMT Steel and Thaifoods Group

0.18

Correlation Coefficient

TMT Steel  Thaifoods Group

Average diversification

The 3 months correlation between TMT and Thaifoods is 0.18. Overlapping area represents the amount of risk that can be diversified away by holding TMT Steel Public 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 TMT Steel 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 TMT Steel Public 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 TMT Steel i.e., TMT Steel and Thaifoods Group go up and down completely randomly.

Pair Corralation between TMT Steel and Thaifoods Group

Assuming the 90 days trading horizon TMT Steel is expected to generate 129.02 times less return on investment than Thaifoods Group. But when comparing it to its historical volatility, TMT Steel Public is 1.12 times less risky than Thaifoods Group. It trades about 0.0 of its potential returns per unit of risk. Thaifoods Group Public is currently generating about 0.23 of returns per unit of risk over similar time horizon. If you would invest  320.00  in Thaifoods Group Public on December 30, 2024 and sell it today you would earn a total of  132.00  from holding Thaifoods Group Public or generate 41.25% return on investment over 90 days.

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

TMT Steel Public  vs.  Thaifoods Group Public

TMT Steel Public

Risk-Adjusted Performance

Very Weak

Over the last 90 days TMT Steel Public has generated negative risk-adjusted returns adding no value to investors with long positions. Despite quite persistent basic indicators, TMT Steel is not utilizing all of its potentials. The latest stock price mess, may contribute to short-term losses for the institutional investors.

Thaifoods Group Public

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Thaifoods Group Public are ranked lower than 18 (%) of all global equities and portfolios over the last 90 days. Despite quite conflicting technical and fundamental indicators, Thaifoods Group disclosed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with TMT Steel and Thaifoods Group

The main advantage of trading using opposite TMT Steel and Thaifoods Group positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if TMT Steel 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 TMT Steel Public 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 FinTech Suite module to use AI to screen and filter profitable investment opportunities.