Correlation Between SCB X and Central Plaza
Can any of the company-specific risk be diversified away by investing in both SCB X and Central Plaza 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 SCB X and Central Plaza into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between SCB X Public and Central Plaza Hotel, you can compare the effects of market volatilities on SCB X and Central Plaza 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 SCB X with a short position of Central Plaza. Check out your portfolio center. Please also check ongoing floating volatility patterns of SCB X and Central Plaza.
Diversification Opportunities for SCB X and Central Plaza
0.15 | Correlation Coefficient |
Average diversification
The 3 months correlation between SCB and Central is 0.15. Overlapping area represents the amount of risk that can be diversified away by holding SCB X Public and Central Plaza Hotel in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Central Plaza Hotel and SCB X 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 SCB X Public are associated (or correlated) with Central Plaza. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Central Plaza Hotel has no effect on the direction of SCB X i.e., SCB X and Central Plaza go up and down completely randomly.
Pair Corralation between SCB X and Central Plaza
Assuming the 90 days trading horizon SCB X Public is expected to generate 0.6 times more return on investment than Central Plaza. However, SCB X Public is 1.66 times less risky than Central Plaza. It trades about 0.06 of its potential returns per unit of risk. Central Plaza Hotel is currently generating about -0.02 per unit of risk. If you would invest 8,774 in SCB X Public on August 27, 2024 and sell it today you would earn a total of 2,676 from holding SCB X Public or generate 30.5% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 99.79% |
| Values | Daily Returns |
SCB X Public vs. Central Plaza Hotel
Performance |
| Timeline |
| SCB X Public |
| Central Plaza Hotel |
SCB X and Central Plaza Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with SCB X and Central Plaza
The main advantage of trading using opposite SCB X and Central Plaza positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if SCB X position performs unexpectedly, Central Plaza 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 Plaza will offset losses from the drop in Central Plaza's long position.| SCB X vs. Thai Energy Storage | SCB X vs. Royal Orchid Hotel | SCB X vs. Grand Canal Land | SCB X vs. PRG Public |
| Central Plaza vs. Minor International Public | Central Plaza vs. Central Pattana Public | Central Plaza vs. CP ALL Public | Central Plaza vs. Bangkok Dusit Medical |
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 Price Transformation module to use Price Transformation models to analyze the depth of different equity instruments across global markets.
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