Correlation Between Samchai Steel and Central Retail

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

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

Diversification Opportunities for Samchai Steel and Central Retail

-0.13

Correlation Coefficient

Samchai Steel  Central Retail

Good diversification

The 3 months correlation between Samchai and Central is -0.13. Overlapping area represents the amount of risk that can be diversified away by holding Samchai Steel Industries and Central Retail in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Central Retail and Samchai 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 Samchai Steel Industries are associated (or correlated) with Central Retail. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Central Retail has no effect on the direction of Samchai Steel i.e., Samchai Steel and Central Retail go up and down completely randomly.

Pair Corralation between Samchai Steel and Central Retail

Assuming the 90 days trading horizon Samchai Steel Industries is expected to generate 7.61 times more return on investment than Central Retail. However, Samchai Steel is 7.61 times more volatile than Central Retail. It trades about 0.11 of its potential returns per unit of risk. Central Retail is currently generating about 0.08 per unit of risk. If you would invest  13.00  in Samchai Steel Industries on September 26, 2024 and sell it today you would earn a total of  9.00  from holding Samchai Steel Industries or generate 69.23% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	98.36%
Values	Daily Returns

Samchai Steel Industries  vs.  Central Retail

Samchai Steel Industries

Risk-Adjusted Performance

8 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Samchai Steel Industries are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. Despite quite conflicting primary indicators, Samchai Steel disclosed solid returns over the last few months and may actually be approaching a breakup point.

Central Retail

Risk-Adjusted Performance

6 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Central Retail are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. Despite quite conflicting fundamental indicators, Central Retail may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with Samchai Steel and Central Retail

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

The idea behind Samchai Steel Industries and Central Retail 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 Stock Screener module to find equities using a custom stock filter or screen asymmetry in trading patterns, price, volume, or investment outlook..