Correlation Between Siamgas and Watsco

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

Diversification Opportunities for Siamgas and Watsco

-0.23

Correlation Coefficient

Siamgas  Watsco

Very good diversification

The 3 months correlation between Siamgas and Watsco is -0.23. Overlapping area represents the amount of risk that can be diversified away by holding Siamgas And Petrochemicals and Watsco Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Watsco Inc 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 Watsco. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Watsco Inc has no effect on the direction of Siamgas i.e., Siamgas and Watsco go up and down completely randomly.

Pair Corralation between Siamgas and Watsco

Assuming the 90 days trading horizon Siamgas And Petrochemicals is expected to under-perform the Watsco. In addition to that, Siamgas is 1.64 times more volatile than Watsco Inc. It trades about -0.01 of its total potential returns per unit of risk. Watsco Inc is currently generating about 0.07 per unit of volatility. If you would invest  43,786  in Watsco Inc on September 29, 2024 and sell it today you would earn a total of  2,894  from holding Watsco Inc or generate 6.61% return on investment over 90 days.

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

Siamgas And Petrochemicals  vs.  Watsco Inc

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. In spite of comparatively stable basic indicators, Siamgas is not utilizing all of its potentials. The newest stock price uproar, may contribute to short-horizon losses for the private investors.

Watsco Inc

Risk-Adjusted Performance

5 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Watsco Inc are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. Despite nearly uncertain basic indicators, Watsco may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with Siamgas and Watsco

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

The idea behind Siamgas And Petrochemicals and Watsco Inc 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.