Correlation Between KC Metalsheet and Thai Union

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

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

Diversification Opportunities for KC Metalsheet and Thai Union

0.5

Correlation Coefficient

KC Metalsheet  Thai Union

Very weak diversification

The 3 months correlation between KCM and Thai is 0.5. Overlapping area represents the amount of risk that can be diversified away by holding KC Metalsheet Public and Thai Union Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Thai Union Group and KC Metalsheet 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 KC Metalsheet Public are associated (or correlated) with Thai Union. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Thai Union Group has no effect on the direction of KC Metalsheet i.e., KC Metalsheet and Thai Union go up and down completely randomly.

Pair Corralation between KC Metalsheet and Thai Union

Assuming the 90 days trading horizon KC Metalsheet is expected to generate 82.8 times less return on investment than Thai Union. But when comparing it to its historical volatility, KC Metalsheet Public is 24.79 times less risky than Thai Union. It trades about 0.03 of its potential returns per unit of risk. Thai Union Group is currently generating about 0.11 of returns per unit of risk over similar time horizon. If you would invest  1,301  in Thai Union Group on September 5, 2024 and sell it today you would earn a total of  59.00  from holding Thai Union Group or generate 4.53% return on investment over 90 days.

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

KC Metalsheet Public  vs.  Thai Union Group

KC Metalsheet Public

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in KC Metalsheet Public are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. Despite quite weak primary indicators, KC Metalsheet may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Thai Union Group

Risk-Adjusted Performance

8 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Thai Union Group are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. Despite quite conflicting forward-looking signals, Thai Union disclosed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with KC Metalsheet and Thai Union

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

The idea behind KC Metalsheet Public and Thai Union Group 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 Theme Ratings module to determine theme ratings based on digital equity recommendations. Macroaxis theme ratings are based on combination of fundamental analysis and risk-adjusted market performance.