Correlation Between Siam Commercial and North East

Can any of the company-specific risk be diversified away by investing in both Siam Commercial and North East 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 Siam Commercial and North East into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between The Siam Commercial and North East Rubbers, you can compare the effects of market volatilities on Siam Commercial and North East 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 Siam Commercial with a short position of North East. Check out your portfolio center. Please also check ongoing floating volatility patterns of Siam Commercial and North East.

Diversification Opportunities for Siam Commercial and North East

-0.22

Correlation Coefficient

Siam Commercial  North East

Very good diversification

The 3 months correlation between Siam and North is -0.22. Overlapping area represents the amount of risk that can be diversified away by holding The Siam Commercial and North East Rubbers in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on North East Rubbers and Siam Commercial 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 The Siam Commercial are associated (or correlated) with North East. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of North East Rubbers has no effect on the direction of Siam Commercial i.e., Siam Commercial and North East go up and down completely randomly.

Pair Corralation between Siam Commercial and North East

Assuming the 90 days trading horizon The Siam Commercial is expected to generate 0.63 times more return on investment than North East. However, The Siam Commercial is 1.58 times less risky than North East. It trades about 0.22 of its potential returns per unit of risk. North East Rubbers is currently generating about -0.1 per unit of risk. If you would invest  11,496  in The Siam Commercial on September 28, 2024 and sell it today you would earn a total of  304.00  from holding The Siam Commercial or generate 2.64% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	95.24%
Values	Daily Returns

The Siam Commercial  vs.  North East Rubbers

Siam Commercial

Risk-Adjusted Performance

9 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in The Siam Commercial are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak fundamental drivers, Siam Commercial sustained solid returns over the last few months and may actually be approaching a breakup point.

North East Rubbers

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days North East Rubbers has generated negative risk-adjusted returns adding no value to investors with long positions. Despite weak 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 Siam Commercial and North East

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

The idea behind The Siam Commercial and North East Rubbers 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 AI Portfolio Architect module to use AI to generate optimal portfolios and find profitable investment opportunities.