Correlation Between Ratch Group and Royal Orchid
Can any of the company-specific risk be diversified away by investing in both Ratch Group and Royal Orchid 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 Ratch Group and Royal Orchid into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Ratch Group Public and Royal Orchid Hotel, you can compare the effects of market volatilities on Ratch Group and Royal Orchid 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 Ratch Group with a short position of Royal Orchid. Check out your portfolio center. Please also check ongoing floating volatility patterns of Ratch Group and Royal Orchid.
Diversification Opportunities for Ratch Group and Royal Orchid
0.51 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Ratch and Royal is 0.51. Overlapping area represents the amount of risk that can be diversified away by holding Ratch Group Public and Royal Orchid Hotel in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Royal Orchid Hotel and Ratch Group 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 Ratch Group Public are associated (or correlated) with Royal Orchid. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Royal Orchid Hotel has no effect on the direction of Ratch Group i.e., Ratch Group and Royal Orchid go up and down completely randomly.
Pair Corralation between Ratch Group and Royal Orchid
Assuming the 90 days trading horizon Ratch Group Public is expected to under-perform the Royal Orchid. But the stock apears to be less risky and, when comparing its historical volatility, Ratch Group Public is 2.17 times less risky than Royal Orchid. The stock trades about -0.13 of its potential returns per unit of risk. The Royal Orchid Hotel is currently generating about -0.03 of returns per unit of risk over similar time horizon. If you would invest 228.00 in Royal Orchid Hotel on September 23, 2024 and sell it today you would lose (14.00) from holding Royal Orchid Hotel or give up 6.14% of portfolio value over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Weak |
Accuracy | 100.0% |
Values | Daily Returns |
Ratch Group Public vs. Royal Orchid Hotel
Performance |
Timeline |
Ratch Group Public |
Royal Orchid Hotel |
Ratch Group and Royal Orchid Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Ratch Group and Royal Orchid
The main advantage of trading using opposite Ratch Group and Royal Orchid positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Ratch Group position performs unexpectedly, Royal Orchid 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 Royal Orchid will offset losses from the drop in Royal Orchid's long position.Ratch Group vs. Electricity Generating Public | Ratch Group vs. PTT Public | Ratch Group vs. Advanced Info Service | Ratch Group vs. The Siam Cement |
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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 Portfolio Suggestion module to get suggestions outside of your existing asset allocation including your own model portfolios.
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