Correlation Between Samchai Steel and Next Capital

Can any of the company-specific risk be diversified away by investing in both Samchai Steel and Next Capital 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 Next Capital 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 Next Capital Public, you can compare the effects of market volatilities on Samchai Steel and Next Capital 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 Next Capital. Check out your portfolio center. Please also check ongoing floating volatility patterns of Samchai Steel and Next Capital.

Diversification Opportunities for Samchai Steel and Next Capital

-0.39

Correlation Coefficient

Samchai Steel  Next Capital

Very good diversification

The 3 months correlation between Samchai and Next is -0.39. Overlapping area represents the amount of risk that can be diversified away by holding Samchai Steel Industries and Next Capital Public in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Next Capital Public 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 Next Capital. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Next Capital Public has no effect on the direction of Samchai Steel i.e., Samchai Steel and Next Capital go up and down completely randomly.

Pair Corralation between Samchai Steel and Next Capital

Assuming the 90 days trading horizon Samchai Steel Industries is expected to generate 3.28 times more return on investment than Next Capital. However, Samchai Steel is 3.28 times more volatile than Next Capital Public. It trades about 0.01 of its potential returns per unit of risk. Next Capital Public is currently generating about -0.22 per unit of risk. If you would invest  23.00  in Samchai Steel Industries on September 27, 2024 and sell it today you would lose (1.00) from holding Samchai Steel Industries or give up 4.35% of portfolio value over 90 days.

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

Samchai Steel Industries  vs.  Next Capital Public

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.

Next Capital Public

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Next Capital Public 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 forward-looking signals 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 Samchai Steel and Next Capital

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

The idea behind Samchai Steel Industries and Next Capital 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 Portfolio Dashboard module to portfolio dashboard that provides centralized access to all your investments.