Correlation Between Thai Metal and Ratchthani Leasing

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

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

Diversification Opportunities for Thai Metal and Ratchthani Leasing

-0.16

Correlation Coefficient

Thai Metal  Ratchthani Leasing

Good diversification

The 3 months correlation between Thai and Ratchthani is -0.16. Overlapping area represents the amount of risk that can be diversified away by holding Thai Metal Drum and Ratchthani Leasing Public in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Ratchthani Leasing Public and Thai Metal 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 Thai Metal Drum are associated (or correlated) with Ratchthani Leasing. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Ratchthani Leasing Public has no effect on the direction of Thai Metal i.e., Thai Metal and Ratchthani Leasing go up and down completely randomly.

Pair Corralation between Thai Metal and Ratchthani Leasing

Assuming the 90 days trading horizon Thai Metal Drum is expected to generate 1.41 times more return on investment than Ratchthani Leasing. However, Thai Metal is 1.41 times more volatile than Ratchthani Leasing Public. It trades about 0.11 of its potential returns per unit of risk. Ratchthani Leasing Public is currently generating about 0.08 per unit of risk. If you would invest  2,430  in Thai Metal Drum on September 15, 2024 and sell it today you would earn a total of  20.00  from holding Thai Metal Drum or generate 0.82% return on investment over 90 days.

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

Thai Metal Drum  vs.  Ratchthani Leasing Public

Thai Metal Drum

Risk-Adjusted Performance

9 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Thai Metal Drum are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. Despite quite conflicting fundamental indicators, Thai Metal disclosed solid returns over the last few months and may actually be approaching a breakup point.

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 conflicting 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.

Pair Trading with Thai Metal and Ratchthani Leasing

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

The idea behind Thai Metal Drum and Ratchthani Leasing 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 Portfolio Diagnostics module to use generated alerts and portfolio events aggregator to diagnose current holdings.