Correlation Between Thai Vegetable and Sappe Public

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

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

Diversification Opportunities for Thai Vegetable and Sappe Public

-0.01

Correlation Coefficient

Thai Vegetable  Sappe Public

Good diversification

The 3 months correlation between Thai and Sappe is -0.01. Overlapping area represents the amount of risk that can be diversified away by holding Thai Vegetable Oil and Sappe Public in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sappe Public and Thai Vegetable 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 Vegetable Oil are associated (or correlated) with Sappe Public. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Sappe Public has no effect on the direction of Thai Vegetable i.e., Thai Vegetable and Sappe Public go up and down completely randomly.

Pair Corralation between Thai Vegetable and Sappe Public

Assuming the 90 days trading horizon Thai Vegetable Oil is expected to generate 0.22 times more return on investment than Sappe Public. However, Thai Vegetable Oil is 4.45 times less risky than Sappe Public. It trades about -0.14 of its potential returns per unit of risk. Sappe Public is currently generating about -0.32 per unit of risk. If you would invest  2,274  in Thai Vegetable Oil on October 9, 2024 and sell it today you would lose (34.00) from holding Thai Vegetable Oil or give up 1.5% of portfolio value over 90 days.

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

Thai Vegetable Oil  vs.  Sappe Public

Thai Vegetable Oil

Risk-Adjusted Performance

9 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Thai Vegetable Oil are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak fundamental drivers, Thai Vegetable sustained solid returns over the last few months and may actually be approaching a breakup point.

Sappe Public

Risk-Adjusted Performance

0 of 100

Very Weak

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

Pair Trading with Thai Vegetable and Sappe Public

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

The idea behind Thai Vegetable Oil and Sappe 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 Sign In To Macroaxis module to sign in to explore Macroaxis' wealth optimization platform and fintech modules.