Correlation Between Thai Vegetable and Taokaenoi Food

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

Diversification Opportunities for Thai Vegetable and Taokaenoi Food

-0.26

Correlation Coefficient

Thai Vegetable  Taokaenoi Food

Very good diversification

The 3 months correlation between Thai and Taokaenoi is -0.26. Overlapping area represents the amount of risk that can be diversified away by holding Thai Vegetable Oil 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 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 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 Vegetable i.e., Thai Vegetable and Taokaenoi Food go up and down completely randomly.

Pair Corralation between Thai Vegetable and Taokaenoi Food

Assuming the 90 days trading horizon Thai Vegetable Oil is expected to under-perform the Taokaenoi Food. But the stock apears to be less risky and, when comparing its historical volatility, Thai Vegetable Oil is 1.13 times less risky than Taokaenoi Food. The stock trades about -0.03 of its potential returns per unit of risk. The Taokaenoi Food Marketing is currently generating about 0.01 of returns per unit of risk over similar time horizon. If you would invest  808.00  in Taokaenoi Food Marketing on December 30, 2024 and sell it today you would earn a total of  2.00  from holding Taokaenoi Food Marketing or generate 0.25% return on investment over 90 days.

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

Thai Vegetable Oil  vs.  Taokaenoi Food Marketing

Thai Vegetable Oil

Risk-Adjusted Performance

Very Weak

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

Taokaenoi Food Marketing

Risk-Adjusted Performance

Very Weak

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

Pair Trading with Thai Vegetable and Taokaenoi Food

The main advantage of trading using opposite Thai Vegetable and Taokaenoi Food positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Thai Vegetable 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 Vegetable Oil 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.

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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 Aroon Oscillator module to analyze current equity momentum using Aroon Oscillator and other momentum ratios.