Correlation Between City Steel and Thai Wah
Can any of the company-specific risk be diversified away by investing in both City Steel and Thai Wah 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 Wah 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 Wah Public, you can compare the effects of market volatilities on City Steel and Thai Wah 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 Wah. Check out your portfolio center. Please also check ongoing floating volatility patterns of City Steel and Thai Wah.
Diversification Opportunities for City Steel and Thai Wah
0.63 | Correlation Coefficient |
Poor diversification
The 3 months correlation between City and Thai is 0.63. Overlapping area represents the amount of risk that can be diversified away by holding City Steel Public and Thai Wah Public in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Thai Wah Public 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 Wah. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Thai Wah Public has no effect on the direction of City Steel i.e., City Steel and Thai Wah go up and down completely randomly.
Pair Corralation between City Steel and Thai Wah
Assuming the 90 days trading horizon City Steel Public is expected to generate 0.84 times more return on investment than Thai Wah. However, City Steel Public is 1.19 times less risky than Thai Wah. It trades about -0.16 of its potential returns per unit of risk. Thai Wah Public is currently generating about -0.3 per unit of risk. If you would invest 194.00 in City Steel Public on September 14, 2024 and sell it today you would lose (8.00) from holding City Steel Public or give up 4.12% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
City Steel Public vs. Thai Wah Public
Performance |
| Timeline |
| City Steel Public |
| Thai Wah Public |
City Steel and Thai Wah Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with City Steel and Thai Wah
The main advantage of trading using opposite City Steel and Thai Wah positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if City Steel position performs unexpectedly, Thai Wah 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 Wah will offset losses from the drop in Thai Wah's long position.| City Steel vs. Capital Engineering Network | City Steel vs. Bangsaphan Barmill Public | City Steel vs. CSP Steel Center | City Steel vs. Gratitude Infinite Public |
| Thai Wah vs. Charan Insurance Public | Thai Wah vs. AIM Industrial Growth | Thai Wah vs. Thai Life Insurance | Thai Wah vs. Ingress Industrial 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 Idea Analyzer module to analyze all characteristics, volatility and risk-adjusted return of Macroaxis ideas.
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