Correlation Between Home Product and Ratchthani Leasing
Can any of the company-specific risk be diversified away by investing in both Home Product and Ratchthani Leasing 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 Ratchthani Leasing 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 Ratchthani Leasing Public, you can compare the effects of market volatilities on Home Product and Ratchthani Leasing 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 Ratchthani Leasing. Check out your portfolio center. Please also check ongoing floating volatility patterns of Home Product and Ratchthani Leasing.
Diversification Opportunities for Home Product and Ratchthani Leasing
0.69 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Home and Ratchthani is 0.69. Overlapping area represents the amount of risk that can be diversified away by holding Home Product Center and Ratchthani Leasing Public in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Ratchthani Leasing 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 Ratchthani Leasing. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Ratchthani Leasing Public has no effect on the direction of Home Product i.e., Home Product and Ratchthani Leasing go up and down completely randomly.
Pair Corralation between Home Product and Ratchthani Leasing
Assuming the 90 days trading horizon Home Product is expected to generate 84.42 times less return on investment than Ratchthani Leasing. But when comparing it to its historical volatility, Home Product Center is 38.57 times less risky than Ratchthani Leasing. It trades about 0.04 of its potential returns per unit of risk. Ratchthani Leasing Public is currently generating about 0.08 of returns per unit of risk over similar time horizon. If you would invest 171.00 in Ratchthani Leasing Public on November 3, 2024 and sell it today you would lose (41.00) from holding Ratchthani Leasing Public or give up 23.98% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Home Product Center vs. Ratchthani Leasing Public
Performance |
| Timeline |
| Home Product Center |
| Ratchthani Leasing Public |
Home Product and Ratchthani Leasing Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Home Product and Ratchthani Leasing
The main advantage of trading using opposite Home Product and Ratchthani Leasing positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Home Product position performs unexpectedly, Ratchthani Leasing 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 Ratchthani Leasing will offset losses from the drop in Ratchthani Leasing'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 |
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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 Sectors module to list of equity sectors categorizing publicly traded companies based on their primary business activities.
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