Correlation Between Thaifoods Group and Krungdhep Sophon

Can any of the company-specific risk be diversified away by investing in both Thaifoods Group and Krungdhep Sophon 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 Thaifoods Group and Krungdhep Sophon into the same portfolio, which is an essential part of the fundamental portfolio management process.

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

Diversification Opportunities for Thaifoods Group and Krungdhep Sophon

0.26

Correlation Coefficient

Thaifoods Group  Krungdhep Sophon

Modest diversification

The 3 months correlation between Thaifoods and Krungdhep is 0.26. Overlapping area represents the amount of risk that can be diversified away by holding Thaifoods Group Public and Krungdhep Sophon Public in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Krungdhep Sophon Public and Thaifoods Group 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 Thaifoods Group Public are associated (or correlated) with Krungdhep Sophon. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Krungdhep Sophon Public has no effect on the direction of Thaifoods Group i.e., Thaifoods Group and Krungdhep Sophon go up and down completely randomly.

Pair Corralation between Thaifoods Group and Krungdhep Sophon

Assuming the 90 days trading horizon Thaifoods Group Public is expected to under-perform the Krungdhep Sophon. But the stock apears to be less risky and, when comparing its historical volatility, Thaifoods Group Public is 2.88 times less risky than Krungdhep Sophon. The stock trades about -0.39 of its potential returns per unit of risk. The Krungdhep Sophon Public is currently generating about -0.06 of returns per unit of risk over similar time horizon. If you would invest  32,500  in Krungdhep Sophon Public on September 15, 2024 and sell it today you would lose (1,500) from holding Krungdhep Sophon Public or give up 4.62% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	95.24%
Values	Daily Returns

Thaifoods Group Public  vs.  Krungdhep Sophon Public

Thaifoods Group Public

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Thaifoods Group 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 technical and fundamental indicators 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.

Krungdhep Sophon Public

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Krungdhep Sophon Public are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. Despite quite conflicting fundamental indicators, Krungdhep Sophon disclosed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Thaifoods Group and Krungdhep Sophon

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

The idea behind Thaifoods Group Public and Krungdhep Sophon 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 Alpha Finder module to use alpha and beta coefficients to find investment opportunities after accounting for the risk.