Correlation Between AP Public and Chonburi Concrete

Can any of the company-specific risk be diversified away by investing in both AP Public 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 AP Public and Chonburi Concrete into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between AP Public and Chonburi Concrete Product, you can compare the effects of market volatilities on AP Public 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 AP Public with a short position of Chonburi Concrete. Check out your portfolio center. Please also check ongoing floating volatility patterns of AP Public and Chonburi Concrete.

Diversification Opportunities for AP Public and Chonburi Concrete

0.86

Correlation Coefficient

AP Public  Chonburi Concrete

Very poor diversification

The 3 months correlation between AP Public and Chonburi is 0.86. Overlapping area represents the amount of risk that can be diversified away by holding AP Public 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 AP Public 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 AP Public 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 AP Public i.e., AP Public and Chonburi Concrete go up and down completely randomly.

Pair Corralation between AP Public and Chonburi Concrete

Assuming the 90 days horizon AP Public is expected to under-perform the Chonburi Concrete. But the stock apears to be less risky and, when comparing its historical volatility, AP Public is 1.28 times less risky than Chonburi Concrete. The stock trades about -0.11 of its potential returns per unit of risk. The Chonburi Concrete Product is currently generating about -0.04 of returns per unit of risk over similar time horizon. If you would invest  31.00  in Chonburi Concrete Product on September 16, 2024 and sell it today you would lose (2.00) from holding Chonburi Concrete Product or give up 6.45% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Strong
Accuracy	100.0%
Values	Daily Returns

AP Public  vs.  Chonburi Concrete Product

AP Public

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days AP Public has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest conflicting performance, the Stock's fundamental drivers remain persistent and the latest mess on Wall Street may also be a sign of long-standing gains for the company institutional investors.

Chonburi Concrete Product

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Chonburi Concrete Product has generated negative risk-adjusted returns adding no value to investors with long positions. Despite quite persistent basic indicators, Chonburi Concrete is not utilizing all of its potentials. The latest stock price mess, may contribute to short-term losses for the institutional investors.

Pair Trading with AP Public and Chonburi Concrete

The main advantage of trading using opposite AP Public and Chonburi Concrete positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if AP Public 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 AP Public 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 Fundamentals Comparison module to compare fundamentals across multiple equities to find investing opportunities.