Correlation Between SCG Packaging and Thai Life

Can any of the company-specific risk be diversified away by investing in both SCG Packaging and Thai Life 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 SCG Packaging and Thai Life into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between SCG Packaging Public and Thai Life Insurance, you can compare the effects of market volatilities on SCG Packaging and Thai Life 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 SCG Packaging with a short position of Thai Life. Check out your portfolio center. Please also check ongoing floating volatility patterns of SCG Packaging and Thai Life.

Diversification Opportunities for SCG Packaging and Thai Life

-0.17

Correlation Coefficient

SCG Packaging  Thai Life

Good diversification

The 3 months correlation between SCG and Thai is -0.17. Overlapping area represents the amount of risk that can be diversified away by holding SCG Packaging Public and Thai Life Insurance in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Thai Life Insurance and SCG Packaging 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 SCG Packaging Public are associated (or correlated) with Thai Life. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Thai Life Insurance has no effect on the direction of SCG Packaging i.e., SCG Packaging and Thai Life go up and down completely randomly.

Pair Corralation between SCG Packaging and Thai Life

Assuming the 90 days trading horizon SCG Packaging Public is expected to generate 22.75 times more return on investment than Thai Life. However, SCG Packaging is 22.75 times more volatile than Thai Life Insurance. It trades about 0.04 of its potential returns per unit of risk. Thai Life Insurance is currently generating about -0.01 per unit of risk. If you would invest  5,758  in SCG Packaging Public on September 26, 2024 and sell it today you would lose (3,768) from holding SCG Packaging Public or give up 65.44% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	99.79%
Values	Daily Returns

SCG Packaging Public  vs.  Thai Life Insurance

SCG Packaging Public

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days SCG Packaging 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.

Thai Life Insurance

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Thai Life Insurance has generated negative risk-adjusted returns adding no value to investors with long positions. Despite quite persistent forward indicators, Thai Life is not utilizing all of its potentials. The latest stock price mess, may contribute to short-term losses for the institutional investors.

Pair Trading with SCG Packaging and Thai Life

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

The idea behind SCG Packaging Public and Thai Life Insurance 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 Tickers module to use high-impact, comprehensive, and customizable stock tickers that can be easily integrated to any websites.