Correlation Between Quality Houses and Central Pattana
Can any of the company-specific risk be diversified away by investing in both Quality Houses 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 Quality Houses and Central Pattana into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Quality Houses Public and Central Pattana Public, you can compare the effects of market volatilities on Quality Houses 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 Quality Houses with a short position of Central Pattana. Check out your portfolio center. Please also check ongoing floating volatility patterns of Quality Houses and Central Pattana.
Diversification Opportunities for Quality Houses and Central Pattana
0.89 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Quality and Central is 0.89. Overlapping area represents the amount of risk that can be diversified away by holding Quality Houses Public 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 Quality Houses 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 Quality Houses Public 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 Quality Houses i.e., Quality Houses and Central Pattana go up and down completely randomly.
Pair Corralation between Quality Houses and Central Pattana
Assuming the 90 days horizon Quality Houses Public is expected to under-perform the Central Pattana. But the stock apears to be less risky and, when comparing its historical volatility, Quality Houses Public is 1.22 times less risky than Central Pattana. The stock trades about -0.02 of its potential returns per unit of risk. The Central Pattana Public is currently generating about 0.0 of returns per unit of risk over similar time horizon. If you would invest 6,369 in Central Pattana Public on August 28, 2024 and sell it today you would lose (194.00) from holding Central Pattana Public or give up 3.05% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Quality Houses Public vs. Central Pattana Public
Performance |
| Timeline |
| Quality Houses Public |
| Central Pattana Public |
Quality Houses and Central Pattana Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Quality Houses and Central Pattana
The main advantage of trading using opposite Quality Houses and Central Pattana positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Quality Houses 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.The idea behind Quality Houses Public and Central Pattana Public pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.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 Portfolio Rebalancing module to analyze risk-adjusted returns against different time horizons to find asset-allocation targets.
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