Correlation Between Central Pattana and Ichitan Group
Can any of the company-specific risk be diversified away by investing in both Central Pattana and Ichitan Group 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 Ichitan Group 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 Ichitan Group Public, you can compare the effects of market volatilities on Central Pattana and Ichitan Group 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 Ichitan Group. Check out your portfolio center. Please also check ongoing floating volatility patterns of Central Pattana and Ichitan Group.
Diversification Opportunities for Central Pattana and Ichitan Group
0.65 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Central and Ichitan is 0.65. Overlapping area represents the amount of risk that can be diversified away by holding Central Pattana Public and Ichitan Group Public in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Ichitan Group 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 Ichitan Group. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Ichitan Group Public has no effect on the direction of Central Pattana i.e., Central Pattana and Ichitan Group go up and down completely randomly.
Pair Corralation between Central Pattana and Ichitan Group
Assuming the 90 days trading horizon Central Pattana Public is expected to generate 0.87 times more return on investment than Ichitan Group. However, Central Pattana Public is 1.15 times less risky than Ichitan Group. It trades about 0.02 of its potential returns per unit of risk. Ichitan Group Public is currently generating about -0.03 per unit of risk. If you would invest 5,800 in Central Pattana Public on August 31, 2024 and sell it today you would earn a total of 200.00 from holding Central Pattana Public or generate 3.45% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Central Pattana Public vs. Ichitan Group Public
Performance |
| Timeline |
| Central Pattana Public |
| Ichitan Group Public |
Central Pattana and Ichitan Group Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Central Pattana and Ichitan Group
The main advantage of trading using opposite Central Pattana and Ichitan Group positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Central Pattana position performs unexpectedly, Ichitan Group 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 Ichitan Group will offset losses from the drop in Ichitan Group'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 |
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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 Channel module to use Commodity Channel Index to analyze current equity momentum.
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