Correlation Between Thai Vegetable and Saha Union

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

Diversification Opportunities for Thai Vegetable and Saha Union

0.34

Correlation Coefficient

Thai Vegetable  Saha Union

Weak diversification

The 3 months correlation between Thai and Saha is 0.34. Overlapping area represents the amount of risk that can be diversified away by holding Thai Vegetable Oil and Saha Union Public in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Saha Union 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 Saha Union. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Saha Union Public has no effect on the direction of Thai Vegetable i.e., Thai Vegetable and Saha Union go up and down completely randomly.

Pair Corralation between Thai Vegetable and Saha Union

Assuming the 90 days trading horizon Thai Vegetable Oil is expected to under-perform the Saha Union. But the stock apears to be less risky and, when comparing its historical volatility, Thai Vegetable Oil is 1.19 times less risky than Saha Union. The stock trades about -0.24 of its potential returns per unit of risk. The Saha Union Public is currently generating about 0.09 of returns per unit of risk over similar time horizon. If you would invest  3,100  in Saha Union Public on September 15, 2024 and sell it today you would earn a total of  50.00  from holding Saha Union Public or generate 1.61% return on investment over 90 days.

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

Thai Vegetable Oil  vs.  Saha Union Public

Thai Vegetable Oil

Risk-Adjusted Performance

0 of 100

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 quite persistent basic indicators, Thai Vegetable is not utilizing all of its potentials. The latest stock price mess, may contribute to short-term losses for the institutional investors.

Saha Union Public

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Saha Union Public are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. Despite quite persistent fundamental indicators, Saha Union is not utilizing all of its potentials. The latest stock price mess, may contribute to short-term losses for the institutional investors.

Pair Trading with Thai Vegetable and Saha Union

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

The idea behind Thai Vegetable Oil and Saha Union 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.

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 Watchlist Optimization module to optimize watchlists to build efficient portfolios or rebalance existing positions based on the mean-variance optimization algorithm.