Correlation Between Thai Union and Taokaenoi Food

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

Diversification Opportunities for Thai Union and Taokaenoi Food

0.87

Correlation Coefficient

Thai Union  Taokaenoi Food

Very poor diversification

The 3 months correlation between Thai and Taokaenoi is 0.87. Overlapping area represents the amount of risk that can be diversified away by holding Thai Union Group and Taokaenoi Food Marketing in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Taokaenoi Food 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 Taokaenoi Food. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Taokaenoi Food Marketing has no effect on the direction of Thai Union i.e., Thai Union and Taokaenoi Food go up and down completely randomly.

Pair Corralation between Thai Union and Taokaenoi Food

Assuming the 90 days horizon Thai Union Group is expected to generate 0.64 times more return on investment than Taokaenoi Food. However, Thai Union Group is 1.56 times less risky than Taokaenoi Food. It trades about -0.27 of its potential returns per unit of risk. Taokaenoi Food Marketing is currently generating about -0.39 per unit of risk. If you would invest  1,500  in Thai Union Group on September 3, 2024 and sell it today you would lose (130.00) from holding Thai Union Group or give up 8.67% of portfolio value over 90 days.

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

Thai Union Group  vs.  Taokaenoi Food Marketing

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 conflicting fundamental drivers, Thai Union disclosed solid returns over the last few months and may actually be approaching a breakup point.

Taokaenoi Food Marketing

Risk-Adjusted Performance

9 of 100

OK

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

Pair Trading with Thai Union and Taokaenoi Food

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

The idea behind Thai Union Group and Taokaenoi Food Marketing 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 Piotroski F Score module to get Piotroski F Score based on the binary analysis strategy of nine different fundamentals.