Correlation Between Central Pattana and Siam Cement
Can any of the company-specific risk be diversified away by investing in both Central Pattana and Siam Cement 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 Siam Cement 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 The Siam Cement, you can compare the effects of market volatilities on Central Pattana and Siam Cement 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 Siam Cement. Check out your portfolio center. Please also check ongoing floating volatility patterns of Central Pattana and Siam Cement.
Diversification Opportunities for Central Pattana and Siam Cement
0.97 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between Central and Siam is 0.97. Overlapping area represents the amount of risk that can be diversified away by holding Central Pattana Public and The Siam Cement in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Siam Cement 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 Siam Cement. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Siam Cement has no effect on the direction of Central Pattana i.e., Central Pattana and Siam Cement go up and down completely randomly.
Pair Corralation between Central Pattana and Siam Cement
Assuming the 90 days trading horizon Central Pattana Public is expected to generate 0.77 times more return on investment than Siam Cement. However, Central Pattana Public is 1.29 times less risky than Siam Cement. It trades about -0.16 of its potential returns per unit of risk. The Siam Cement is currently generating about -0.17 per unit of risk. If you would invest 5,650 in Central Pattana Public on November 3, 2024 and sell it today you would lose (350.00) from holding Central Pattana Public or give up 6.19% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Central Pattana Public vs. The Siam Cement
Performance |
| Timeline |
| Central Pattana Public |
| Siam Cement |
Central Pattana and Siam Cement Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Central Pattana and Siam Cement
The main advantage of trading using opposite Central Pattana and Siam Cement positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Central Pattana position performs unexpectedly, Siam Cement 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 Siam Cement will offset losses from the drop in Siam Cement'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 |
| Siam Cement vs. Sun Vending Technology | Siam Cement vs. Plan B Media | Siam Cement vs. Thonburi Medical Centre | Siam Cement vs. Ekachai Medical Care |
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 Investing Opportunities module to build portfolios using our predefined set of ideas and optimize them against your investing preferences.
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