Correlation Between Chiangmai Frozen and Ratchthani Leasing

Can any of the company-specific risk be diversified away by investing in both Chiangmai Frozen and Ratchthani Leasing 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 Chiangmai Frozen and Ratchthani Leasing into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Chiangmai Frozen Foods and Ratchthani Leasing Public, you can compare the effects of market volatilities on Chiangmai Frozen and Ratchthani Leasing 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 Chiangmai Frozen with a short position of Ratchthani Leasing. Check out your portfolio center. Please also check ongoing floating volatility patterns of Chiangmai Frozen and Ratchthani Leasing.

Diversification Opportunities for Chiangmai Frozen and Ratchthani Leasing

0.91

Correlation Coefficient

Chiangmai Frozen  Ratchthani Leasing

Almost no diversification

The 3 months correlation between Chiangmai and Ratchthani is 0.91. Overlapping area represents the amount of risk that can be diversified away by holding Chiangmai Frozen Foods and Ratchthani Leasing Public in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Ratchthani Leasing Public and Chiangmai Frozen 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 Chiangmai Frozen Foods are associated (or correlated) with Ratchthani Leasing. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Ratchthani Leasing Public has no effect on the direction of Chiangmai Frozen i.e., Chiangmai Frozen and Ratchthani Leasing go up and down completely randomly.

Pair Corralation between Chiangmai Frozen and Ratchthani Leasing

Assuming the 90 days horizon Chiangmai Frozen Foods is expected to generate 1.0 times more return on investment than Ratchthani Leasing. However, Chiangmai Frozen Foods is 1.0 times less risky than Ratchthani Leasing. It trades about 0.12 of its potential returns per unit of risk. Ratchthani Leasing Public is currently generating about 0.12 per unit of risk. If you would invest  0.00  in Chiangmai Frozen Foods on September 3, 2024 and sell it today you would earn a total of  202.00  from holding Chiangmai Frozen Foods or generate 9.223372036854776E16% return on investment over 90 days.

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

Chiangmai Frozen Foods  vs.  Ratchthani Leasing Public

Chiangmai Frozen Foods

Risk-Adjusted Performance

9 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Chiangmai Frozen Foods are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. Despite quite conflicting fundamental drivers, Chiangmai Frozen disclosed solid returns over the last few months and may actually be approaching a breakup point.

Ratchthani Leasing Public

Risk-Adjusted Performance

9 of 100

OK

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

Pair Trading with Chiangmai Frozen and Ratchthani Leasing

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

The idea behind Chiangmai Frozen Foods and Ratchthani Leasing 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 Portfolio Backtesting module to avoid under-diversification and over-optimization by backtesting your portfolios.