Correlation Between Exotic Food and Thai Life

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

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

Diversification Opportunities for Exotic Food and Thai Life

-0.35

Correlation Coefficient

Exotic Food  Thai Life

Very good diversification

The 3 months correlation between Exotic and Thai is -0.35. Overlapping area represents the amount of risk that can be diversified away by holding Exotic Food Public and Thai Life Insurance in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Thai Life Insurance and Exotic Food 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 Exotic Food Public are associated (or correlated) with Thai Life. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Thai Life Insurance has no effect on the direction of Exotic Food i.e., Exotic Food and Thai Life go up and down completely randomly.

Pair Corralation between Exotic Food and Thai Life

Assuming the 90 days horizon Exotic Food Public is expected to under-perform the Thai Life. In addition to that, Exotic Food is 1.46 times more volatile than Thai Life Insurance. It trades about -0.02 of its total potential returns per unit of risk. Thai Life Insurance is currently generating about 0.02 per unit of volatility. If you would invest  1,034  in Thai Life Insurance on September 12, 2024 and sell it today you would earn a total of  66.00  from holding Thai Life Insurance or generate 6.38% return on investment over 90 days.

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

Exotic Food Public  vs.  Thai Life Insurance

Exotic Food Public

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Exotic Food Public has generated negative risk-adjusted returns adding no value to investors with long positions. Despite conflicting performance in the last few months, the Stock's fundamental drivers remain quite persistent which may send shares a bit higher in January 2025. The latest mess may also be a sign of long-standing up-swing for the company institutional investors.

Thai Life Insurance

Risk-Adjusted Performance

13 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Thai Life Insurance are ranked lower than 13 (%) of all global equities and portfolios over the last 90 days. Despite quite conflicting forward indicators, Thai Life disclosed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Exotic Food and Thai Life

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

The idea behind Exotic Food Public and Thai Life Insurance 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 Global Correlations module to find global opportunities by holding instruments from different markets.