Correlation Between Vichitbhan Palmoil and Srisawad Power

Can any of the company-specific risk be diversified away by investing in both Vichitbhan Palmoil and Srisawad Power 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 Vichitbhan Palmoil and Srisawad Power into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Vichitbhan Palmoil Public and Srisawad Power 1979, you can compare the effects of market volatilities on Vichitbhan Palmoil and Srisawad Power 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 Vichitbhan Palmoil with a short position of Srisawad Power. Check out your portfolio center. Please also check ongoing floating volatility patterns of Vichitbhan Palmoil and Srisawad Power.

Diversification Opportunities for Vichitbhan Palmoil and Srisawad Power

0.84

Correlation Coefficient

Vichitbhan Palmoil  Srisawad Power

Very poor diversification

The 3 months correlation between Vichitbhan and Srisawad is 0.84. Overlapping area represents the amount of risk that can be diversified away by holding Vichitbhan Palmoil Public and Srisawad Power 1979 in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Srisawad Power 1979 and Vichitbhan Palmoil 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 Vichitbhan Palmoil Public are associated (or correlated) with Srisawad Power. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Srisawad Power 1979 has no effect on the direction of Vichitbhan Palmoil i.e., Vichitbhan Palmoil and Srisawad Power go up and down completely randomly.

Pair Corralation between Vichitbhan Palmoil and Srisawad Power

Assuming the 90 days trading horizon Vichitbhan Palmoil Public is expected to generate 1.0 times more return on investment than Srisawad Power. However, Vichitbhan Palmoil is 1.0 times more volatile than Srisawad Power 1979. It trades about 0.13 of its potential returns per unit of risk. Srisawad Power 1979 is currently generating about 0.13 per unit of risk. If you would invest  0.00  in Vichitbhan Palmoil Public on September 3, 2024 and sell it today you would earn a total of  65.00  from holding Vichitbhan Palmoil Public or generate 9.223372036854776E16% return on investment over 90 days.

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

Vichitbhan Palmoil Public  vs.  Srisawad Power 1979

Vichitbhan Palmoil Public

Risk-Adjusted Performance

10 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Vichitbhan Palmoil Public are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. Despite quite conflicting basic indicators, Vichitbhan Palmoil disclosed solid returns over the last few months and may actually be approaching a breakup point.

Srisawad Power 1979

Risk-Adjusted Performance

9 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Srisawad Power 1979 are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. Despite somewhat conflicting fundamental drivers, Srisawad Power sustained solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Vichitbhan Palmoil and Srisawad Power

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

The idea behind Vichitbhan Palmoil Public and Srisawad Power 1979 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.