Correlation Between Thai Vegetable and Lee Feed
Can any of the company-specific risk be diversified away by investing in both Thai Vegetable and Lee Feed 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 Thai Vegetable and Lee Feed into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Thai Vegetable Oil and Lee Feed Mill, you can compare the effects of market volatilities on Thai Vegetable and Lee Feed 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 Thai Vegetable with a short position of Lee Feed. Check out your portfolio center. Please also check ongoing floating volatility patterns of Thai Vegetable and Lee Feed.
Diversification Opportunities for Thai Vegetable and Lee Feed
0.61 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Thai and Lee is 0.61. Overlapping area represents the amount of risk that can be diversified away by holding Thai Vegetable Oil and Lee Feed Mill in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Lee Feed Mill and Thai Vegetable 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 Thai Vegetable Oil are associated (or correlated) with Lee Feed. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Lee Feed Mill has no effect on the direction of Thai Vegetable i.e., Thai Vegetable and Lee Feed go up and down completely randomly.
Pair Corralation between Thai Vegetable and Lee Feed
Assuming the 90 days trading horizon Thai Vegetable Oil is expected to generate 1.01 times more return on investment than Lee Feed. However, Thai Vegetable is 1.01 times more volatile than Lee Feed Mill. It trades about -0.05 of its potential returns per unit of risk. Lee Feed Mill is currently generating about -0.06 per unit of risk. If you would invest 2,380 in Thai Vegetable Oil on September 16, 2024 and sell it today you would lose (90.00) from holding Thai Vegetable Oil or give up 3.78% of portfolio value over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Significant |
Accuracy | 100.0% |
Values | Daily Returns |
Thai Vegetable Oil vs. Lee Feed Mill
Performance |
Timeline |
Thai Vegetable Oil |
Lee Feed Mill |
Thai Vegetable and Lee Feed Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Thai Vegetable and Lee Feed
The main advantage of trading using opposite Thai Vegetable and Lee Feed positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Thai Vegetable position performs unexpectedly, Lee Feed 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 Lee Feed will offset losses from the drop in Lee Feed's long position.Thai Vegetable vs. Charoen Pokphand Foods | Thai Vegetable vs. Thai Union Group | Thai Vegetable vs. TISCO Financial Group | Thai Vegetable vs. Thanachart Capital Public |
Lee Feed vs. GFPT Public | Lee Feed vs. KGI Securities Public | Lee Feed vs. Thai Vegetable Oil | Lee Feed vs. Lam Soon Public |
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 Equity Forecasting module to use basic forecasting models to generate price predictions and determine price momentum.
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