Correlation Between Siam Cement and Quality Houses

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

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

Diversification Opportunities for Siam Cement and Quality Houses

0.85

Correlation Coefficient

Siam Cement  Quality Houses

Very poor diversification

The 3 months correlation between Siam and Quality is 0.85. Overlapping area represents the amount of risk that can be diversified away by holding The Siam Cement and Quality Houses Public in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Quality Houses Public and Siam Cement 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 Cement are associated (or correlated) with Quality Houses. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Quality Houses Public has no effect on the direction of Siam Cement i.e., Siam Cement and Quality Houses go up and down completely randomly.

Pair Corralation between Siam Cement and Quality Houses

Assuming the 90 days trading horizon The Siam Cement is expected to under-perform the Quality Houses. In addition to that, Siam Cement is 1.23 times more volatile than Quality Houses Public. It trades about -0.28 of its total potential returns per unit of risk. Quality Houses Public is currently generating about -0.13 per unit of volatility. If you would invest  194.00  in Quality Houses Public on September 26, 2024 and sell it today you would lose (23.00) from holding Quality Houses Public or give up 11.86% of portfolio value over 90 days.

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

The Siam Cement  vs.  Quality Houses Public

Siam Cement

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days The Siam Cement 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 fundamental 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.

Quality Houses Public

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Quality Houses Public has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest conflicting performance, the Stock's fundamental drivers remain persistent and the latest mess on Wall Street may also be a sign of long-standing gains for the company institutional investors.

Pair Trading with Siam Cement and Quality Houses

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

The idea behind The Siam Cement and Quality Houses 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 Theme Ratings module to determine theme ratings based on digital equity recommendations. Macroaxis theme ratings are based on combination of fundamental analysis and risk-adjusted market performance.