Correlation Between Home Product and Central Pattana
Can any of the company-specific risk be diversified away by investing in both Home Product and Central Pattana 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 Home Product and Central Pattana into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Home Product Center and Central Pattana Public, you can compare the effects of market volatilities on Home Product and Central Pattana 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 Home Product with a short position of Central Pattana. Check out your portfolio center. Please also check ongoing floating volatility patterns of Home Product and Central Pattana.
Diversification Opportunities for Home Product and Central Pattana
0.86 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Home and Central is 0.86. Overlapping area represents the amount of risk that can be diversified away by holding Home Product Center and Central Pattana Public in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Central Pattana Public and Home Product 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 Home Product Center are associated (or correlated) with Central Pattana. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Central Pattana Public has no effect on the direction of Home Product i.e., Home Product and Central Pattana go up and down completely randomly.
Pair Corralation between Home Product and Central Pattana
Assuming the 90 days trading horizon Home Product Center is expected to under-perform the Central Pattana. In addition to that, Home Product is 1.12 times more volatile than Central Pattana Public. It trades about -0.04 of its total potential returns per unit of risk. Central Pattana Public is currently generating about -0.01 per unit of volatility. If you would invest 6,685 in Central Pattana Public on August 31, 2024 and sell it today you would lose (685.00) from holding Central Pattana Public or give up 10.25% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Home Product Center vs. Central Pattana Public
Performance |
| Timeline |
| Home Product Center |
| Central Pattana Public |
Home Product and Central Pattana Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Home Product and Central Pattana
The main advantage of trading using opposite Home Product and Central Pattana positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Home Product position performs unexpectedly, Central Pattana 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 Central Pattana will offset losses from the drop in Central Pattana's long position.| Home Product vs. CP ALL Public | Home Product vs. Bangkok Dusit Medical | Home Product vs. Central Pattana Public | Home Product vs. Advanced Info Service |
| Central Pattana vs. CP ALL Public | Central Pattana vs. Bangkok Dusit Medical | Central Pattana vs. Airports of Thailand | Central Pattana vs. Advanced Info Service |
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 Screener module to find equities using a custom stock filter or screen asymmetry in trading patterns, price, volume, or investment outlook..
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