Correlation Between Siam Cement and Chonburi Concrete

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Can any of the company-specific risk be diversified away by investing in both Siam Cement and Chonburi Concrete 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 Siam Cement and Chonburi Concrete into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between The Siam Cement and Chonburi Concrete Product, you can compare the effects of market volatilities on Siam Cement and Chonburi Concrete 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 Siam Cement with a short position of Chonburi Concrete. Check out your portfolio center. Please also check ongoing floating volatility patterns of Siam Cement and Chonburi Concrete.

Diversification Opportunities for Siam Cement and Chonburi Concrete

0.18
  Correlation Coefficient

Average diversification

The 3 months correlation between Siam and Chonburi is 0.18. Overlapping area represents the amount of risk that can be diversified away by holding The Siam Cement and Chonburi Concrete Product in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Chonburi Concrete Product and Siam Cement 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 The Siam Cement are associated (or correlated) with Chonburi Concrete. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Chonburi Concrete Product has no effect on the direction of Siam Cement i.e., Siam Cement and Chonburi Concrete go up and down completely randomly.

Pair Corralation between Siam Cement and Chonburi Concrete

Assuming the 90 days trading horizon The Siam Cement is expected to under-perform the Chonburi Concrete. But the stock apears to be less risky and, when comparing its historical volatility, The Siam Cement is 1.09 times less risky than Chonburi Concrete. The stock trades about -0.17 of its potential returns per unit of risk. The Chonburi Concrete Product is currently generating about -0.07 of returns per unit of risk over similar time horizon. If you would invest  30.00  in Chonburi Concrete Product on August 29, 2024 and sell it today you would lose (1.00) from holding Chonburi Concrete Product or give up 3.33% of portfolio value over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthInsignificant
Accuracy100.0%
ValuesDaily Returns

The Siam Cement  vs.  Chonburi Concrete Product

 Performance 
       Timeline  
Siam Cement 

Risk-Adjusted Performance

0 of 100

 
Weak
 
Strong
Very Weak
Over the last 90 days The Siam Cement has generated negative risk-adjusted returns adding no value to investors with long positions. Despite conflicting performance in the last few months, the Stock's fundamental indicators remain quite persistent which may send shares a bit higher in December 2024. The latest mess may also be a sign of long-standing up-swing for the company institutional investors.
Chonburi Concrete Product 

Risk-Adjusted Performance

8 of 100

 
Weak
 
Strong
OK
Compared to the overall equity markets, risk-adjusted returns on investments in Chonburi Concrete Product are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. Despite quite conflicting basic indicators, Chonburi Concrete disclosed solid returns over the last few months and may actually be approaching a breakup point.

Siam Cement and Chonburi Concrete Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Siam Cement and Chonburi Concrete

The main advantage of trading using opposite Siam Cement and Chonburi Concrete positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Siam Cement position performs unexpectedly, Chonburi Concrete 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 Chonburi Concrete will offset losses from the drop in Chonburi Concrete's long position.
The idea behind The Siam Cement and Chonburi Concrete Product 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.
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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 Transaction History module to view history of all your transactions and understand their impact on performance.

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