Correlation Between Thai Metal and Central Retail
Can any of the company-specific risk be diversified away by investing in both Thai Metal and Central Retail 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 Thai Metal and Central Retail into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Thai Metal Drum and Central Retail, you can compare the effects of market volatilities on Thai Metal and Central Retail 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 Thai Metal with a short position of Central Retail. Check out your portfolio center. Please also check ongoing floating volatility patterns of Thai Metal and Central Retail.
Diversification Opportunities for Thai Metal and Central Retail
0.08 | Correlation Coefficient |
Significant diversification
The 3 months correlation between Thai and Central is 0.08. Overlapping area represents the amount of risk that can be diversified away by holding Thai Metal Drum and Central Retail in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Central Retail and Thai Metal 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 Thai Metal Drum are associated (or correlated) with Central Retail. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Central Retail has no effect on the direction of Thai Metal i.e., Thai Metal and Central Retail go up and down completely randomly.
Pair Corralation between Thai Metal and Central Retail
Assuming the 90 days trading horizon Thai Metal is expected to generate 2.88 times less return on investment than Central Retail. But when comparing it to its historical volatility, Thai Metal Drum is 2.04 times less risky than Central Retail. It trades about 0.08 of its potential returns per unit of risk. Central Retail is currently generating about 0.11 of returns per unit of risk over similar time horizon. If you would invest 3,200 in Central Retail on September 1, 2024 and sell it today you would earn a total of 150.00 from holding Central Retail or generate 4.69% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Thai Metal Drum vs. Central Retail
Performance |
| Timeline |
| Thai Metal Drum |
| Central Retail |
Thai Metal and Central Retail Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Thai Metal and Central Retail
The main advantage of trading using opposite Thai Metal and Central Retail positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Thai Metal position performs unexpectedly, Central Retail 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 Retail will offset losses from the drop in Central Retail's long position.| Thai Metal vs. Thantawan Industry Public | Thai Metal vs. Thitikorn Public | Thai Metal vs. Siam Steel Service | Thai Metal vs. Thai Vegetable Oil |
| Central Retail vs. PTT Oil and | Central Retail vs. Delta Electronics Public | Central Retail vs. Com7 PCL | Central Retail vs. The Erawan Group |
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 Global Markets Map module to get a quick overview of global market snapshot using zoomable world map. Drill down to check world indexes.
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