Correlation Between VGI Public and Thai Vegetable

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

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

Diversification Opportunities for VGI Public and Thai Vegetable

0.49

Correlation Coefficient

VGI Public  Thai Vegetable

Very weak diversification

The 3 months correlation between VGI and Thai is 0.49. Overlapping area represents the amount of risk that can be diversified away by holding VGI Public and Thai Vegetable Oil in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Thai Vegetable Oil and VGI Public 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 VGI Public are associated (or correlated) with Thai Vegetable. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Thai Vegetable Oil has no effect on the direction of VGI Public i.e., VGI Public and Thai Vegetable go up and down completely randomly.

Pair Corralation between VGI Public and Thai Vegetable

Assuming the 90 days trading horizon VGI Public is expected to under-perform the Thai Vegetable. In addition to that, VGI Public is 2.2 times more volatile than Thai Vegetable Oil. It trades about -0.04 of its total potential returns per unit of risk. Thai Vegetable Oil is currently generating about -0.03 per unit of volatility. If you would invest  2,283  in Thai Vegetable Oil on December 28, 2024 and sell it today you would lose (103.00) from holding Thai Vegetable Oil or give up 4.51% of portfolio value over 90 days.

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

VGI Public  vs.  Thai Vegetable Oil

VGI Public

Risk-Adjusted Performance

Very Weak

Over the last 90 days VGI Public has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest conflicting performance, the Stock's forward indicators remain persistent and the latest mess on Wall Street may also be a sign of long-standing gains for the company institutional investors.

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.

Pair Trading with VGI Public and Thai Vegetable

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

The idea behind VGI Public and Thai Vegetable Oil 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 Pattern Recognition module to use different Pattern Recognition models to time the market across multiple global exchanges.