Correlation Between CH Karnchang and Teka Construction
Can any of the company-specific risk be diversified away by investing in both CH Karnchang and Teka Construction 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 CH Karnchang and Teka Construction into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between CH Karnchang Public and Teka Construction PCL, you can compare the effects of market volatilities on CH Karnchang and Teka Construction 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 CH Karnchang with a short position of Teka Construction. Check out your portfolio center. Please also check ongoing floating volatility patterns of CH Karnchang and Teka Construction.
Diversification Opportunities for CH Karnchang and Teka Construction
0.69 | Correlation Coefficient |
Poor diversification
The 3 months correlation between CH Karnchang and Teka is 0.69. Overlapping area represents the amount of risk that can be diversified away by holding CH Karnchang Public and Teka Construction PCL in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Teka Construction PCL and CH Karnchang 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 CH Karnchang Public are associated (or correlated) with Teka Construction. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Teka Construction PCL has no effect on the direction of CH Karnchang i.e., CH Karnchang and Teka Construction go up and down completely randomly.
Pair Corralation between CH Karnchang and Teka Construction
Assuming the 90 days horizon CH Karnchang Public is expected to under-perform the Teka Construction. But the stock apears to be less risky and, when comparing its historical volatility, CH Karnchang Public is 1.27 times less risky than Teka Construction. The stock trades about -0.06 of its potential returns per unit of risk. The Teka Construction PCL is currently generating about 0.03 of returns per unit of risk over similar time horizon. If you would invest 212.00 in Teka Construction PCL on September 3, 2024 and sell it today you would earn a total of 12.00 from holding Teka Construction PCL or generate 5.66% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
CH Karnchang Public vs. Teka Construction PCL
Performance |
| Timeline |
| CH Karnchang Public |
| Teka Construction PCL |
CH Karnchang and Teka Construction Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with CH Karnchang and Teka Construction
The main advantage of trading using opposite CH Karnchang and Teka Construction positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if CH Karnchang position performs unexpectedly, Teka Construction 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 Teka Construction will offset losses from the drop in Teka Construction's long position.| CH Karnchang vs. Italian Thai Development Public | CH Karnchang vs. Charoen Pokphand Foods | CH Karnchang vs. Land and Houses | CH Karnchang vs. Bangkok Bank Public |
| Teka Construction vs. TKrungthai Industries Public | Teka Construction vs. TCM Public | Teka Construction vs. Well Graded Engineering | Teka Construction vs. The Steel 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 AI Portfolio Architect module to use AI to generate optimal portfolios and find profitable investment opportunities.
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