Correlation Between Ama Marine and Siam City

Can any of the company-specific risk be diversified away by investing in both Ama Marine and Siam City 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 Ama Marine and Siam City into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Ama Marine Public and Siam City Cement, you can compare the effects of market volatilities on Ama Marine and Siam City 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 Ama Marine with a short position of Siam City. Check out your portfolio center. Please also check ongoing floating volatility patterns of Ama Marine and Siam City.

Diversification Opportunities for Ama Marine and Siam City

-0.09

Correlation Coefficient

Ama Marine  Siam City

Good diversification

The 3 months correlation between Ama and Siam is -0.09. Overlapping area represents the amount of risk that can be diversified away by holding Ama Marine Public and Siam City Cement in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Siam City Cement and Ama Marine 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 Ama Marine Public are associated (or correlated) with Siam City. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Siam City Cement has no effect on the direction of Ama Marine i.e., Ama Marine and Siam City go up and down completely randomly.

Pair Corralation between Ama Marine and Siam City

Assuming the 90 days trading horizon Ama Marine Public is expected to under-perform the Siam City. But the stock apears to be less risky and, when comparing its historical volatility, Ama Marine Public is 3.57 times less risky than Siam City. The stock trades about -0.11 of its potential returns per unit of risk. The Siam City Cement is currently generating about 0.23 of returns per unit of risk over similar time horizon. If you would invest  14,650  in Siam City Cement on October 10, 2024 and sell it today you would earn a total of  1,550  from holding Siam City Cement or generate 10.58% return on investment over 90 days.

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

Ama Marine Public  vs.  Siam City Cement

Ama Marine Public

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Ama Marine Public has generated negative risk-adjusted returns adding no value to investors with long positions. Despite quite persistent basic indicators, Ama Marine is not utilizing all of its potentials. The current stock price mess, may contribute to short-term losses for the institutional investors.

Siam City Cement

Risk-Adjusted Performance

9 of 100

OK

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

Pair Trading with Ama Marine and Siam City

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

The idea behind Ama Marine Public and Siam City Cement 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 FinTech Suite module to use AI to screen and filter profitable investment opportunities.