Correlation Between AUTO TRADER and Polyplex (Thailand)

Can any of the company-specific risk be diversified away by investing in both AUTO TRADER and Polyplex (Thailand) 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 AUTO TRADER and Polyplex (Thailand) into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between AUTO TRADER ADR and Polyplex PCL, you can compare the effects of market volatilities on AUTO TRADER and Polyplex (Thailand) 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 AUTO TRADER with a short position of Polyplex (Thailand). Check out your portfolio center. Please also check ongoing floating volatility patterns of AUTO TRADER and Polyplex (Thailand).

Diversification Opportunities for AUTO TRADER and Polyplex (Thailand)

0.66

Correlation Coefficient

AUTO TRADER  Polyplex (Thailand)

Poor diversification

The 3 months correlation between AUTO and Polyplex is 0.66. Overlapping area represents the amount of risk that can be diversified away by holding AUTO TRADER ADR and Polyplex PCL in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Polyplex (Thailand) and AUTO TRADER 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 AUTO TRADER ADR are associated (or correlated) with Polyplex (Thailand). Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Polyplex (Thailand) has no effect on the direction of AUTO TRADER i.e., AUTO TRADER and Polyplex (Thailand) go up and down completely randomly.

Pair Corralation between AUTO TRADER and Polyplex (Thailand)

Assuming the 90 days trading horizon AUTO TRADER ADR is expected to generate 0.51 times more return on investment than Polyplex (Thailand). However, AUTO TRADER ADR is 1.96 times less risky than Polyplex (Thailand). It trades about -0.06 of its potential returns per unit of risk. Polyplex PCL is currently generating about -0.08 per unit of risk. If you would invest  231.00  in AUTO TRADER ADR on December 22, 2024 and sell it today you would lose (13.00) from holding AUTO TRADER ADR or give up 5.63% of portfolio value over 90 days.

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

AUTO TRADER ADR  vs.  Polyplex PCL

AUTO TRADER ADR

Risk-Adjusted Performance

Very Weak

Over the last 90 days AUTO TRADER ADR has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable basic indicators, AUTO TRADER is not utilizing all of its potentials. The newest stock price disturbance, may contribute to mid-run losses for the stockholders.

Polyplex (Thailand)

Risk-Adjusted Performance

Very Weak

Over the last 90 days Polyplex PCL has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fragile performance in the last few months, the Stock's basic indicators remain comparatively stable which may send shares a bit higher in April 2025. The newest uproar may also be a sign of mid-term up-swing for the firm private investors.

Pair Trading with AUTO TRADER and Polyplex (Thailand)

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

The idea behind AUTO TRADER ADR and Polyplex PCL 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 Watchlist Optimization module to optimize watchlists to build efficient portfolios or rebalance existing positions based on the mean-variance optimization algorithm.