Correlation Between SCB X and Land
Can any of the company-specific risk be diversified away by investing in both SCB X and Land 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 Land 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 Land and Houses, you can compare the effects of market volatilities on SCB X and Land 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 Land. Check out your portfolio center. Please also check ongoing floating volatility patterns of SCB X and Land.
Diversification Opportunities for SCB X and Land
Average diversification
The 3 months correlation between SCB and Land is 0.15. Overlapping area represents the amount of risk that can be diversified away by holding SCB X Public and Land and Houses in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Land and Houses 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 Land. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Land and Houses has no effect on the direction of SCB X i.e., SCB X and Land go up and down completely randomly.
Pair Corralation between SCB X and Land
Assuming the 90 days trading horizon SCB X is expected to generate 45.39 times less return on investment than Land. But when comparing it to its historical volatility, SCB X Public is 48.9 times less risky than Land. It trades about 0.05 of its potential returns per unit of risk. Land and Houses is currently generating about 0.05 of returns per unit of risk over similar time horizon. If you would invest 787.00 in Land and Houses on August 28, 2024 and sell it today you would lose (227.00) from holding Land and Houses or give up 28.84% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 99.71% |
| Values | Daily Returns |
SCB X Public vs. Land and Houses
Performance |
| Timeline |
| SCB X Public |
| Land and Houses |
SCB X and Land Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with SCB X and Land
The main advantage of trading using opposite SCB X and Land positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if SCB X position performs unexpectedly, Land 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 Land will offset losses from the drop in Land'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 |
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 Backtesting module to avoid under-diversification and over-optimization by backtesting your portfolios.
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