Correlation Between Thai Union and Srinanaporn Marketing

Can any of the company-specific risk be diversified away by investing in both Thai Union and Srinanaporn Marketing 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 Thai Union and Srinanaporn Marketing into the same portfolio, which is an essential part of the fundamental portfolio management process.

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

Diversification Opportunities for Thai Union and Srinanaporn Marketing

-0.16

Correlation Coefficient

Thai Union  Srinanaporn Marketing

Good diversification

The 3 months correlation between Thai and Srinanaporn is -0.16. Overlapping area represents the amount of risk that can be diversified away by holding Thai Union Group and Srinanaporn Marketing Public in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Srinanaporn Marketing and Thai Union 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 Thai Union Group are associated (or correlated) with Srinanaporn Marketing. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Srinanaporn Marketing has no effect on the direction of Thai Union i.e., Thai Union and Srinanaporn Marketing go up and down completely randomly.

Pair Corralation between Thai Union and Srinanaporn Marketing

Assuming the 90 days trading horizon Thai Union Group is expected to generate 44.5 times more return on investment than Srinanaporn Marketing. However, Thai Union is 44.5 times more volatile than Srinanaporn Marketing Public. It trades about 0.08 of its potential returns per unit of risk. Srinanaporn Marketing Public is currently generating about -0.05 per unit of risk. If you would invest  1,301  in Thai Union Group on September 13, 2024 and sell it today you would earn a total of  49.00  from holding Thai Union Group or generate 3.77% return on investment over 90 days.

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

Thai Union Group  vs.  Srinanaporn Marketing Public

Thai Union Group

Risk-Adjusted Performance

9 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Thai Union Group are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. Despite quite weak forward-looking signals, Thai Union disclosed solid returns over the last few months and may actually be approaching a breakup point.

Srinanaporn Marketing

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Srinanaporn Marketing Public has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest weak performance, the Stock's forward-looking signals 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 Thai Union and Srinanaporn Marketing

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

The idea behind Thai Union Group and Srinanaporn Marketing 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 Stocks Directory module to find actively traded stocks across global markets.