Correlation Between City Steel and Thai Metal
Can any of the company-specific risk be diversified away by investing in both City Steel and Thai Metal 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 City Steel and Thai Metal into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between City Steel Public and Thai Metal Drum, you can compare the effects of market volatilities on City Steel and Thai Metal 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 City Steel with a short position of Thai Metal. Check out your portfolio center. Please also check ongoing floating volatility patterns of City Steel and Thai Metal.
Diversification Opportunities for City Steel and Thai Metal
-0.11 | Correlation Coefficient |
Good diversification
The 3 months correlation between City and Thai is -0.11. Overlapping area represents the amount of risk that can be diversified away by holding City Steel Public and Thai Metal Drum in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Thai Metal Drum and City Steel 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 City Steel Public are associated (or correlated) with Thai Metal. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Thai Metal Drum has no effect on the direction of City Steel i.e., City Steel and Thai Metal go up and down completely randomly.
Pair Corralation between City Steel and Thai Metal
Assuming the 90 days trading horizon City Steel Public is expected to under-perform the Thai Metal. In addition to that, City Steel is 1.38 times more volatile than Thai Metal Drum. It trades about -0.07 of its total potential returns per unit of risk. Thai Metal Drum is currently generating about -0.02 per unit of volatility. If you would invest 2,480 in Thai Metal Drum on October 25, 2024 and sell it today you would lose (50.00) from holding Thai Metal Drum or give up 2.02% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
City Steel Public vs. Thai Metal Drum
Performance |
| Timeline |
| City Steel Public |
| Thai Metal Drum |
City Steel and Thai Metal Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with City Steel and Thai Metal
The main advantage of trading using opposite City Steel and Thai Metal positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if City Steel position performs unexpectedly, Thai Metal 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 Metal will offset losses from the drop in Thai Metal's long position.| City Steel vs. Thai Metal Drum | City Steel vs. Thantawan Industry Public | City Steel vs. Univanich Palm Oil | City Steel vs. Union Plastic Public |
| Thai Metal vs. Thantawan Industry Public | Thai Metal vs. Thitikorn Public | Thai Metal vs. Siam Steel Service | Thai Metal vs. Thai Vegetable Oil |
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 Commodity Directory module to find actively traded commodities issued by global exchanges.
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