Correlation Between Central Pattana and Mega Lifesciences
Can any of the company-specific risk be diversified away by investing in both Central Pattana and Mega Lifesciences 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 Mega Lifesciences 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 Mega Lifesciences Public, you can compare the effects of market volatilities on Central Pattana and Mega Lifesciences 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 Mega Lifesciences. Check out your portfolio center. Please also check ongoing floating volatility patterns of Central Pattana and Mega Lifesciences.
Diversification Opportunities for Central Pattana and Mega Lifesciences
0.84 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Central and Mega is 0.84. Overlapping area represents the amount of risk that can be diversified away by holding Central Pattana Public and Mega Lifesciences Public in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Mega Lifesciences 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 Mega Lifesciences. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Mega Lifesciences Public has no effect on the direction of Central Pattana i.e., Central Pattana and Mega Lifesciences go up and down completely randomly.
Pair Corralation between Central Pattana and Mega Lifesciences
Assuming the 90 days trading horizon Central Pattana Public is expected to generate 0.73 times more return on investment than Mega Lifesciences. However, Central Pattana Public is 1.37 times less risky than Mega Lifesciences. It trades about -0.19 of its potential returns per unit of risk. Mega Lifesciences Public is currently generating about -0.25 per unit of risk. If you would invest 6,300 in Central Pattana Public on September 12, 2024 and sell it today you would lose (325.00) from holding Central Pattana Public or give up 5.16% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Central Pattana Public vs. Mega Lifesciences Public
Performance |
| Timeline |
| Central Pattana Public |
| Mega Lifesciences Public |
Central Pattana and Mega Lifesciences Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Central Pattana and Mega Lifesciences
The main advantage of trading using opposite Central Pattana and Mega Lifesciences positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Central Pattana position performs unexpectedly, Mega Lifesciences 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 Mega Lifesciences will offset losses from the drop in Mega Lifesciences' 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 |
| Mega Lifesciences vs. Home Product Center | Mega Lifesciences vs. Minor International Public | Mega Lifesciences vs. Com7 PCL | Mega Lifesciences vs. Bangkok Dusit Medical |
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 Stock Tickers module to use high-impact, comprehensive, and customizable stock tickers that can be easily integrated to any websites.
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