Correlation Between S Khonkaen and Absolute Clean

Can any of the company-specific risk be diversified away by investing in both S Khonkaen and Absolute Clean 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 S Khonkaen and Absolute Clean into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between S Khonkaen Foods and Absolute Clean Energy, you can compare the effects of market volatilities on S Khonkaen and Absolute Clean 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 S Khonkaen with a short position of Absolute Clean. Check out your portfolio center. Please also check ongoing floating volatility patterns of S Khonkaen and Absolute Clean.

Diversification Opportunities for S Khonkaen and Absolute Clean

0.25

Correlation Coefficient

S Khonkaen  Absolute Clean

Modest diversification

The 3 months correlation between SORKON and Absolute is 0.25. Overlapping area represents the amount of risk that can be diversified away by holding S Khonkaen Foods and Absolute Clean Energy in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Absolute Clean Energy and S Khonkaen 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 S Khonkaen Foods are associated (or correlated) with Absolute Clean. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Absolute Clean Energy has no effect on the direction of S Khonkaen i.e., S Khonkaen and Absolute Clean go up and down completely randomly.

Pair Corralation between S Khonkaen and Absolute Clean

Assuming the 90 days trading horizon S Khonkaen Foods is expected to under-perform the Absolute Clean. But the stock apears to be less risky and, when comparing its historical volatility, S Khonkaen Foods is 1.28 times less risky than Absolute Clean. The stock trades about -0.09 of its potential returns per unit of risk. The Absolute Clean Energy is currently generating about -0.03 of returns per unit of risk over similar time horizon. If you would invest  135.00  in Absolute Clean Energy on April 24, 2025 and sell it today you would lose (4.00) from holding Absolute Clean Energy or give up 2.96% of portfolio value over 90 days.

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

S Khonkaen Foods  vs.  Absolute Clean Energy

S Khonkaen Foods

Risk-Adjusted Performance

Very Weak

Over the last 90 days S Khonkaen Foods has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong basic indicators, S Khonkaen is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Absolute Clean Energy

Risk-Adjusted Performance

Very Weak

Over the last 90 days Absolute Clean Energy has generated negative risk-adjusted returns adding no value to investors with long positions. Despite quite persistent technical and fundamental indicators, Absolute Clean is not utilizing all of its potentials. The latest stock price mess, may contribute to short-term losses for the institutional investors.

Pair Trading with S Khonkaen and Absolute Clean

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

The idea behind S Khonkaen Foods and Absolute Clean Energy 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.