Correlation Between Siam Cement and Southern BancShares

Can any of the company-specific risk be diversified away by investing in both Siam Cement and Southern BancShares 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 Southern BancShares 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 Southern BancShares PFD, you can compare the effects of market volatilities on Siam Cement and Southern BancShares 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 Southern BancShares. Check out your portfolio center. Please also check ongoing floating volatility patterns of Siam Cement and Southern BancShares.

Diversification Opportunities for Siam Cement and Southern BancShares

0.09

Correlation Coefficient

Siam Cement  Southern BancShares

Significant diversification

The 3 months correlation between Siam and Southern is 0.09. Overlapping area represents the amount of risk that can be diversified away by holding The Siam Cement and Southern BancShares PFD in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Southern BancShares PFD 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 Southern BancShares. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Southern BancShares PFD has no effect on the direction of Siam Cement i.e., Siam Cement and Southern BancShares go up and down completely randomly.

Pair Corralation between Siam Cement and Southern BancShares

Assuming the 90 days horizon The Siam Cement is expected to generate 1.96 times more return on investment than Southern BancShares. However, Siam Cement is 1.96 times more volatile than Southern BancShares PFD. It trades about 0.01 of its potential returns per unit of risk. Southern BancShares PFD is currently generating about -0.01 per unit of risk. If you would invest  939.00  in The Siam Cement on September 13, 2024 and sell it today you would lose (221.00) from holding The Siam Cement or give up 23.54% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	82.29%
Values	Daily Returns

The Siam Cement  vs.  Southern BancShares PFD

Siam Cement

Risk-Adjusted Performance

9 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in The Siam Cement are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. Despite nearly stable basic indicators, Siam Cement is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

Southern BancShares PFD

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Southern BancShares PFD has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of very healthy fundamental indicators, Southern BancShares is not utilizing all of its potentials. The current stock price disarray, may contribute to short-term losses for the investors.

Pair Trading with Siam Cement and Southern BancShares

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

The idea behind The Siam Cement and Southern BancShares PFD 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 Share Portfolio module to track or share privately all of your investments from the convenience of any device.