Correlation Between Siamgas and ALT Telecom

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

By analyzing existing cross correlation between Siamgas and Petrochemicals and ALT Telecom Public, you can compare the effects of market volatilities on Siamgas and ALT Telecom 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 Siamgas with a short position of ALT Telecom. Check out your portfolio center. Please also check ongoing floating volatility patterns of Siamgas and ALT Telecom.

Diversification Opportunities for Siamgas and ALT Telecom

0.65

Correlation Coefficient

Siamgas  ALT Telecom

Poor diversification

The 3 months correlation between Siamgas and ALT is 0.65. Overlapping area represents the amount of risk that can be diversified away by holding Siamgas and Petrochemicals and ALT Telecom Public in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ALT Telecom Public and Siamgas 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 Siamgas and Petrochemicals are associated (or correlated) with ALT Telecom. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ALT Telecom Public has no effect on the direction of Siamgas i.e., Siamgas and ALT Telecom go up and down completely randomly.

Pair Corralation between Siamgas and ALT Telecom

Assuming the 90 days trading horizon Siamgas and Petrochemicals is expected to under-perform the ALT Telecom. But the stock apears to be less risky and, when comparing its historical volatility, Siamgas and Petrochemicals is 1.97 times less risky than ALT Telecom. The stock trades about -0.24 of its potential returns per unit of risk. The ALT Telecom Public is currently generating about -0.09 of returns per unit of risk over similar time horizon. If you would invest  111.00  in ALT Telecom Public on September 15, 2024 and sell it today you would lose (3.00) from holding ALT Telecom Public or give up 2.7% of portfolio value over 90 days.

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

Siamgas and Petrochemicals  vs.  ALT Telecom Public

Siamgas and Petroche

Risk-Adjusted Performance

0 of 100

Very Weak

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

ALT Telecom Public

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days ALT Telecom Public has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest conflicting performance, the Stock's basic indicators 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 Siamgas and ALT Telecom

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

The idea behind Siamgas and Petrochemicals and ALT Telecom 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 AI Portfolio Architect module to use AI to generate optimal portfolios and find profitable investment opportunities.