Correlation Between Central Retail and Somboon Advance

Can any of the company-specific risk be diversified away by investing in both Central Retail and Somboon Advance 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 Central Retail and Somboon Advance into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Central Retail and Somboon Advance Technology, you can compare the effects of market volatilities on Central Retail and Somboon Advance 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 Central Retail with a short position of Somboon Advance. Check out your portfolio center. Please also check ongoing floating volatility patterns of Central Retail and Somboon Advance.

Diversification Opportunities for Central Retail and Somboon Advance

-0.31

Correlation Coefficient

Central Retail  Somboon Advance

Very good diversification

The 3 months correlation between Central and Somboon is -0.31. Overlapping area represents the amount of risk that can be diversified away by holding Central Retail and Somboon Advance Technology in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Somboon Advance Tech and Central Retail 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 Central Retail are associated (or correlated) with Somboon Advance. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Somboon Advance Tech has no effect on the direction of Central Retail i.e., Central Retail and Somboon Advance go up and down completely randomly.

Pair Corralation between Central Retail and Somboon Advance

Assuming the 90 days trading horizon Central Retail is expected to generate 1.4 times more return on investment than Somboon Advance. However, Central Retail is 1.4 times more volatile than Somboon Advance Technology. It trades about 0.08 of its potential returns per unit of risk. Somboon Advance Technology is currently generating about 0.05 per unit of risk. If you would invest  3,275  in Central Retail on September 15, 2024 and sell it today you would earn a total of  75.00  from holding Central Retail or generate 2.29% return on investment over 90 days.

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

Central Retail  vs.  Somboon Advance Technology

Central Retail

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Central Retail are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. Despite quite persistent fundamental indicators, Central Retail is not utilizing all of its potentials. The latest stock price mess, may contribute to short-term losses for the institutional investors.

Somboon Advance Tech

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Somboon Advance Technology has generated negative risk-adjusted returns adding no value to investors with long positions. Despite conflicting performance in the last few months, the Stock's basic indicators remain quite persistent which may send shares a bit higher in January 2025. The latest mess may also be a sign of long-standing up-swing for the company institutional investors.

Pair Trading with Central Retail and Somboon Advance

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

The idea behind Central Retail and Somboon Advance Technology 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.

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 Balance Of Power module to check stock momentum by analyzing Balance Of Power indicator and other technical ratios.