Correlation Between Exotic Food and Thai Credit

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

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

Diversification Opportunities for Exotic Food and Thai Credit

0.18

Correlation Coefficient

Exotic Food  Thai Credit

Average diversification

The 3 months correlation between Exotic and Thai is 0.18. Overlapping area represents the amount of risk that can be diversified away by holding Exotic Food Public and Thai Credit Pcl in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Thai Credit Pcl and Exotic Food 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 Exotic Food Public are associated (or correlated) with Thai Credit. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Thai Credit Pcl has no effect on the direction of Exotic Food i.e., Exotic Food and Thai Credit go up and down completely randomly.

Pair Corralation between Exotic Food and Thai Credit

Assuming the 90 days horizon Exotic Food Public is expected to generate 0.76 times more return on investment than Thai Credit. However, Exotic Food Public is 1.31 times less risky than Thai Credit. It trades about -0.33 of its potential returns per unit of risk. Thai Credit Pcl is currently generating about -0.72 per unit of risk. If you would invest  2,010  in Exotic Food Public on September 16, 2024 and sell it today you would lose (150.00) from holding Exotic Food Public or give up 7.46% of portfolio value over 90 days.

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

Exotic Food Public  vs.  Thai Credit Pcl

Exotic Food Public

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Exotic Food 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 fundamental drivers 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.

Thai Credit Pcl

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Thai Credit Pcl has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong technical and fundamental indicators, Thai Credit is not utilizing all of its potentials. The latest stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Exotic Food and Thai Credit

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

The idea behind Exotic Food Public and Thai Credit Pcl 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.

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 Backtesting module to avoid under-diversification and over-optimization by backtesting your portfolios.