Correlation Between Siamgas and DOHOME

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

Diversification Opportunities for Siamgas and DOHOME

0.74

Correlation Coefficient

Siamgas  DOHOME

Poor diversification

The 3 months correlation between Siamgas and DOHOME is 0.74. Overlapping area represents the amount of risk that can be diversified away by holding Siamgas and Petrochemicals and DOHOME in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on DOHOME 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 DOHOME. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of DOHOME has no effect on the direction of Siamgas i.e., Siamgas and DOHOME go up and down completely randomly.

Pair Corralation between Siamgas and DOHOME

Assuming the 90 days trading horizon Siamgas and Petrochemicals is expected to generate 0.43 times more return on investment than DOHOME. However, Siamgas and Petrochemicals is 2.35 times less risky than DOHOME. It trades about -0.09 of its potential returns per unit of risk. DOHOME is currently generating about -0.09 per unit of risk. If you would invest  740.00  in Siamgas and Petrochemicals on September 14, 2024 and sell it today you would lose (35.00) from holding Siamgas and Petrochemicals or give up 4.73% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	100.0%
Values	Daily Returns

Siamgas and Petrochemicals  vs.  DOHOME

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.

DOHOME

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days DOHOME has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest conflicting performance, the Stock's primary indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for the company investors.

Pair Trading with Siamgas and DOHOME

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

The idea behind Siamgas and Petrochemicals and DOHOME 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 Headlines Timeline module to stay connected to all market stories and filter out noise. Drill down to analyze hype elasticity.