Correlation Between NSL Foods and Muang Thai
Can any of the company-specific risk be diversified away by investing in both NSL Foods and Muang Thai 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 NSL Foods and Muang Thai into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between NSL Foods Public and Muang Thai Insurance, you can compare the effects of market volatilities on NSL Foods and Muang Thai 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 NSL Foods with a short position of Muang Thai. Check out your portfolio center. Please also check ongoing floating volatility patterns of NSL Foods and Muang Thai.
Diversification Opportunities for NSL Foods and Muang Thai
0.65 | Correlation Coefficient |
Poor diversification
The 3 months correlation between NSL and Muang is 0.65. Overlapping area represents the amount of risk that can be diversified away by holding NSL Foods Public and Muang Thai Insurance in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Muang Thai Insurance and NSL Foods 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 NSL Foods Public are associated (or correlated) with Muang Thai. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Muang Thai Insurance has no effect on the direction of NSL Foods i.e., NSL Foods and Muang Thai go up and down completely randomly.
Pair Corralation between NSL Foods and Muang Thai
Assuming the 90 days trading horizon NSL Foods Public is expected to under-perform the Muang Thai. In addition to that, NSL Foods is 2.28 times more volatile than Muang Thai Insurance. It trades about -0.05 of its total potential returns per unit of risk. Muang Thai Insurance is currently generating about -0.02 per unit of volatility. If you would invest 10,800 in Muang Thai Insurance on September 15, 2024 and sell it today you would lose (150.00) from holding Muang Thai Insurance or give up 1.39% of portfolio value over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Significant |
Accuracy | 100.0% |
Values | Daily Returns |
NSL Foods Public vs. Muang Thai Insurance
Performance |
Timeline |
NSL Foods Public |
Muang Thai Insurance |
NSL Foods and Muang Thai Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with NSL Foods and Muang Thai
The main advantage of trading using opposite NSL Foods and Muang Thai positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if NSL Foods position performs unexpectedly, Muang Thai 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 Muang Thai will offset losses from the drop in Muang Thai's long position.NSL Foods vs. Bangkok Dusit Medical | NSL Foods vs. Union Petrochemical Public | NSL Foods vs. Saksiam Leasing Public | NSL Foods vs. Thonburi Medical Centre |
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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 Portfolio Dashboard module to portfolio dashboard that provides centralized access to all your investments.
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