Correlation Between Thai Steel and Hwa Fong
Can any of the company-specific risk be diversified away by investing in both Thai Steel and Hwa Fong 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 Hwa Fong 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 Hwa Fong Rubber, you can compare the effects of market volatilities on Thai Steel and Hwa Fong 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 Hwa Fong. Check out your portfolio center. Please also check ongoing floating volatility patterns of Thai Steel and Hwa Fong.
Diversification Opportunities for Thai Steel and Hwa Fong
-0.65 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Thai and Hwa is -0.65. Overlapping area represents the amount of risk that can be diversified away by holding Thai Steel Cable and Hwa Fong Rubber in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Hwa Fong Rubber 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 Hwa Fong. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Hwa Fong Rubber has no effect on the direction of Thai Steel i.e., Thai Steel and Hwa Fong go up and down completely randomly.
Pair Corralation between Thai Steel and Hwa Fong
Assuming the 90 days trading horizon Thai Steel is expected to generate 1.23 times less return on investment than Hwa Fong. But when comparing it to its historical volatility, Thai Steel Cable is 1.74 times less risky than Hwa Fong. It trades about 0.15 of its potential returns per unit of risk. Hwa Fong Rubber is currently generating about 0.11 of returns per unit of risk over similar time horizon. If you would invest 416.00 in Hwa Fong Rubber on October 22, 2024 and sell it today you would earn a total of 10.00 from holding Hwa Fong Rubber or generate 2.4% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Thai Steel Cable vs. Hwa Fong Rubber
Performance |
| Timeline |
| Thai Steel Cable |
| Hwa Fong Rubber |
Thai Steel and Hwa Fong Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Thai Steel and Hwa Fong
The main advantage of trading using opposite Thai Steel and Hwa Fong positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Thai Steel position performs unexpectedly, Hwa Fong 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 Hwa Fong will offset losses from the drop in Hwa Fong's long position.| Thai Steel vs. United Paper Public | Thai Steel vs. TMT Steel Public | Thai Steel vs. Thai Stanley Electric | Thai Steel vs. Inoue Rubber Public |
| Hwa Fong vs. Haad Thip Public | Hwa Fong vs. AAPICO Hitech Public | Hwa Fong vs. Inoue Rubber Public | Hwa Fong vs. Hana Microelectronics 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 My Watchlist Analysis module to analyze my current watchlist and to refresh optimization strategy. Macroaxis watchlist is based on self-learning algorithm to remember stocks you like.
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