Correlation Between Thai Steel and CP ALL
Can any of the company-specific risk be diversified away by investing in both Thai Steel and CP ALL 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 Steel and CP ALL into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Thai Steel Cable and CP ALL Public, you can compare the effects of market volatilities on Thai Steel and CP ALL 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 Steel with a short position of CP ALL. Check out your portfolio center. Please also check ongoing floating volatility patterns of Thai Steel and CP ALL.
Diversification Opportunities for Thai Steel and CP ALL
0.22 | Correlation Coefficient |
Modest diversification
The 3 months correlation between Thai and CPALL is 0.22. Overlapping area represents the amount of risk that can be diversified away by holding Thai Steel Cable and CP ALL Public in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on CP ALL Public and Thai Steel 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 Steel Cable are associated (or correlated) with CP ALL. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of CP ALL Public has no effect on the direction of Thai Steel i.e., Thai Steel and CP ALL go up and down completely randomly.
Pair Corralation between Thai Steel and CP ALL
Assuming the 90 days trading horizon Thai Steel Cable is expected to generate 0.8 times more return on investment than CP ALL. However, Thai Steel Cable is 1.26 times less risky than CP ALL. It trades about 0.23 of its potential returns per unit of risk. CP ALL Public is currently generating about -0.13 per unit of risk. If you would invest 1,420 in Thai Steel Cable on September 1, 2024 and sell it today you would earn a total of 60.00 from holding Thai Steel Cable or generate 4.23% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Thai Steel Cable vs. CP ALL Public
Performance |
| Timeline |
| Thai Steel Cable |
| CP ALL Public |
Thai Steel and CP ALL Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Thai Steel and CP ALL
The main advantage of trading using opposite Thai Steel and CP ALL positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Thai Steel position performs unexpectedly, CP ALL 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 CP ALL will offset losses from the drop in CP ALL's long position.| Thai Steel vs. TRC Construction Public | Thai Steel vs. Bangkok Expressway and | Thai Steel vs. Lohakit Metal Public | Thai Steel vs. Gunkul Engineering Public |
| CP ALL vs. MK Restaurant Group | CP ALL vs. TRC Construction Public | CP ALL vs. Bangkok Expressway and | CP ALL vs. Lohakit Metal 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 Price Ceiling Movement module to calculate and plot Price Ceiling Movement for different equity instruments.
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