Correlation Between Capital Engineering and POSCO Thainox

Can any of the company-specific risk be diversified away by investing in both Capital Engineering and POSCO Thainox 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 Capital Engineering and POSCO Thainox into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Capital Engineering Network and POSCO Thainox Public, you can compare the effects of market volatilities on Capital Engineering and POSCO Thainox 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 Capital Engineering with a short position of POSCO Thainox. Check out your portfolio center. Please also check ongoing floating volatility patterns of Capital Engineering and POSCO Thainox.

Diversification Opportunities for Capital Engineering and POSCO Thainox

0.24

Correlation Coefficient

Capital Engineering  POSCO Thainox

Modest diversification

The 3 months correlation between Capital and POSCO is 0.24. Overlapping area represents the amount of risk that can be diversified away by holding Capital Engineering Network and POSCO Thainox Public in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on POSCO Thainox Public and Capital Engineering 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 Capital Engineering Network are associated (or correlated) with POSCO Thainox. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of POSCO Thainox Public has no effect on the direction of Capital Engineering i.e., Capital Engineering and POSCO Thainox go up and down completely randomly.

Pair Corralation between Capital Engineering and POSCO Thainox

Assuming the 90 days trading horizon Capital Engineering Network is expected to generate 0.3 times more return on investment than POSCO Thainox. However, Capital Engineering Network is 3.37 times less risky than POSCO Thainox. It trades about -0.11 of its potential returns per unit of risk. POSCO Thainox Public is currently generating about -0.04 per unit of risk. If you would invest  210.00  in Capital Engineering Network on September 13, 2024 and sell it today you would lose (10.00) from holding Capital Engineering Network or give up 4.76% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	98.36%
Values	Daily Returns

Capital Engineering Network  vs.  POSCO Thainox Public

Capital Engineering

Risk-Adjusted Performance

0 of 100

Very Weak

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

POSCO Thainox Public

Risk-Adjusted Performance

0 of 100

Very Weak

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

Pair Trading with Capital Engineering and POSCO Thainox

The main advantage of trading using opposite Capital Engineering and POSCO Thainox positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Capital Engineering position performs unexpectedly, POSCO Thainox 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 POSCO Thainox will offset losses from the drop in POSCO Thainox's long position.

The idea behind Capital Engineering Network and POSCO Thainox Public 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 Headlines Timeline module to stay connected to all market stories and filter out noise. Drill down to analyze hype elasticity.