Correlation Between Thai Union and President Bakery
Can any of the company-specific risk be diversified away by investing in both Thai Union and President Bakery 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 President Bakery 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 President Bakery Public, you can compare the effects of market volatilities on Thai Union and President Bakery 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 President Bakery. Check out your portfolio center. Please also check ongoing floating volatility patterns of Thai Union and President Bakery.
Diversification Opportunities for Thai Union and President Bakery
0.01 | Correlation Coefficient |
Significant diversification
The 3 months correlation between Thai and President is 0.01. Overlapping area represents the amount of risk that can be diversified away by holding Thai Union Group and President Bakery Public in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on President Bakery Public 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 President Bakery. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of President Bakery Public has no effect on the direction of Thai Union i.e., Thai Union and President Bakery go up and down completely randomly.
Pair Corralation between Thai Union and President Bakery
Assuming the 90 days horizon Thai Union Group is expected to under-perform the President Bakery. In addition to that, Thai Union is 2.47 times more volatile than President Bakery Public. It trades about -0.34 of its total potential returns per unit of risk. President Bakery Public is currently generating about -0.09 per unit of volatility. If you would invest 5,975 in President Bakery Public on September 24, 2024 and sell it today you would lose (75.00) from holding President Bakery Public or give up 1.26% of portfolio value over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Insignificant |
Accuracy | 100.0% |
Values | Daily Returns |
Thai Union Group vs. President Bakery Public
Performance |
Timeline |
Thai Union Group |
President Bakery Public |
Thai Union and President Bakery Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Thai Union and President Bakery
The main advantage of trading using opposite Thai Union and President Bakery positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Thai Union position performs unexpectedly, President Bakery 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 President Bakery will offset losses from the drop in President Bakery's long position.Thai Union vs. Charoen Pokphand Foods | Thai Union vs. CP ALL Public | Thai Union vs. Minor International Public | Thai Union vs. Advanced Info Service |
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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 Top Crypto Exchanges module to search and analyze digital assets across top global cryptocurrency exchanges.
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