Correlation Between Central Pattana and Beauty Community
Can any of the company-specific risk be diversified away by investing in both Central Pattana and Beauty Community 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 Central Pattana and Beauty Community into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Central Pattana Public and Beauty Community Public, you can compare the effects of market volatilities on Central Pattana and Beauty Community 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 Central Pattana with a short position of Beauty Community. Check out your portfolio center. Please also check ongoing floating volatility patterns of Central Pattana and Beauty Community.
Diversification Opportunities for Central Pattana and Beauty Community
0.68 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Central and Beauty is 0.68. Overlapping area represents the amount of risk that can be diversified away by holding Central Pattana Public and Beauty Community Public in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Beauty Community Public and Central Pattana 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 Central Pattana Public are associated (or correlated) with Beauty Community. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Beauty Community Public has no effect on the direction of Central Pattana i.e., Central Pattana and Beauty Community go up and down completely randomly.
Pair Corralation between Central Pattana and Beauty Community
Assuming the 90 days trading horizon Central Pattana Public is expected to generate 0.5 times more return on investment than Beauty Community. However, Central Pattana Public is 2.01 times less risky than Beauty Community. It trades about -0.14 of its potential returns per unit of risk. Beauty Community Public is currently generating about -0.26 per unit of risk. If you would invest 6,275 in Central Pattana Public on September 1, 2024 and sell it today you would lose (275.00) from holding Central Pattana Public or give up 4.38% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 95.65% |
| Values | Daily Returns |
Central Pattana Public vs. Beauty Community Public
Performance |
| Timeline |
| Central Pattana Public |
| Beauty Community Public |
Central Pattana and Beauty Community Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Central Pattana and Beauty Community
The main advantage of trading using opposite Central Pattana and Beauty Community positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Central Pattana position performs unexpectedly, Beauty Community 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 Beauty Community will offset losses from the drop in Beauty Community's long position.| Central Pattana vs. CP ALL Public | Central Pattana vs. Bangkok Dusit Medical | Central Pattana vs. Airports of Thailand | Central Pattana vs. Advanced Info Service |
| Beauty Community vs. CP ALL Public | Beauty Community vs. Airports of Thailand | Beauty Community vs. Bangkok Dusit Medical | Beauty Community vs. Home Product Center |
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 Options Analysis module to analyze and evaluate options and option chains as a potential hedge for your portfolios.
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