Correlation Between Ratchthani Leasing and Thai Reinsurance

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

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

Diversification Opportunities for Ratchthani Leasing and Thai Reinsurance

0.91

Correlation Coefficient

Ratchthani Leasing  Thai Reinsurance

Almost no diversification

The 3 months correlation between Ratchthani and Thai is 0.91. Overlapping area represents the amount of risk that can be diversified away by holding Ratchthani Leasing Public and Thai Reinsurance Public in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Thai Reinsurance Public and Ratchthani Leasing 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 Ratchthani Leasing Public are associated (or correlated) with Thai Reinsurance. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Thai Reinsurance Public has no effect on the direction of Ratchthani Leasing i.e., Ratchthani Leasing and Thai Reinsurance go up and down completely randomly.

Pair Corralation between Ratchthani Leasing and Thai Reinsurance

Assuming the 90 days trading horizon Ratchthani Leasing Public is expected to under-perform the Thai Reinsurance. In addition to that, Ratchthani Leasing is 1.19 times more volatile than Thai Reinsurance Public. It trades about -0.19 of its total potential returns per unit of risk. Thai Reinsurance Public is currently generating about -0.19 per unit of volatility. If you would invest  68.00  in Thai Reinsurance Public on September 24, 2024 and sell it today you would lose (14.00) from holding Thai Reinsurance Public or give up 20.59% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Strong
Accuracy	98.39%
Values	Daily Returns

Ratchthani Leasing Public  vs.  Thai Reinsurance Public

Ratchthani Leasing Public

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Ratchthani Leasing Public 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 drivers remain somewhat strong which may send shares a bit higher in January 2025. The current disturbance may also be a sign of long term up-swing for the company investors.

Thai Reinsurance Public

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Thai Reinsurance Public 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 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.

Pair Trading with Ratchthani Leasing and Thai Reinsurance

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

The idea behind Ratchthani Leasing Public and Thai Reinsurance 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.