Correlation Between Chai Watana and Eastern Commercial
Can any of the company-specific risk be diversified away by investing in both Chai Watana and Eastern Commercial 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 Chai Watana and Eastern Commercial into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Chai Watana Tannery and Eastern Commercial Leasing, you can compare the effects of market volatilities on Chai Watana and Eastern Commercial 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 Chai Watana with a short position of Eastern Commercial. Check out your portfolio center. Please also check ongoing floating volatility patterns of Chai Watana and Eastern Commercial.
Diversification Opportunities for Chai Watana and Eastern Commercial
0.84 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Chai and Eastern is 0.84. Overlapping area represents the amount of risk that can be diversified away by holding Chai Watana Tannery and Eastern Commercial Leasing in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Eastern Commercial and Chai Watana 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 Chai Watana Tannery are associated (or correlated) with Eastern Commercial. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Eastern Commercial has no effect on the direction of Chai Watana i.e., Chai Watana and Eastern Commercial go up and down completely randomly.
Pair Corralation between Chai Watana and Eastern Commercial
Assuming the 90 days trading horizon Chai Watana is expected to generate 1.08 times less return on investment than Eastern Commercial. In addition to that, Chai Watana is 1.0 times more volatile than Eastern Commercial Leasing. It trades about 0.08 of its total potential returns per unit of risk. Eastern Commercial Leasing is currently generating about 0.08 per unit of volatility. If you would invest 73.00 in Eastern Commercial Leasing on November 3, 2024 and sell it today you would earn a total of 14.00 from holding Eastern Commercial Leasing or generate 19.18% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Chai Watana Tannery vs. Eastern Commercial Leasing
Performance |
| Timeline |
| Chai Watana Tannery |
| Eastern Commercial |
Chai Watana and Eastern Commercial Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Chai Watana and Eastern Commercial
The main advantage of trading using opposite Chai Watana and Eastern Commercial positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Chai Watana position performs unexpectedly, Eastern Commercial 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 Eastern Commercial will offset losses from the drop in Eastern Commercial's long position.| Chai Watana vs. Chumporn Palm Oil | Chai Watana vs. Eastern Commercial Leasing | Chai Watana vs. Cal Comp Electronics Public | Chai Watana vs. AAPICO Hitech Public |
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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 Aroon Oscillator module to analyze current equity momentum using Aroon Oscillator and other momentum ratios.
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