Correlation Between Carabao Group and Siam Global

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Can any of the company-specific risk be diversified away by investing in both Carabao Group and Siam Global 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 Carabao Group and Siam Global into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Carabao Group Public and Siam Global House, you can compare the effects of market volatilities on Carabao Group and Siam Global 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 Carabao Group with a short position of Siam Global. Check out your portfolio center. Please also check ongoing floating volatility patterns of Carabao Group and Siam Global.

Diversification Opportunities for Carabao Group and Siam Global

0.79
  Correlation Coefficient

Poor diversification

The 3 months correlation between Carabao and Siam is 0.79. Overlapping area represents the amount of risk that can be diversified away by holding Carabao Group Public and Siam Global House in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Siam Global House and Carabao Group 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 Carabao Group Public are associated (or correlated) with Siam Global. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Siam Global House has no effect on the direction of Carabao Group i.e., Carabao Group and Siam Global go up and down completely randomly.

Pair Corralation between Carabao Group and Siam Global

Assuming the 90 days trading horizon Carabao Group Public is expected to generate 1.04 times more return on investment than Siam Global. However, Carabao Group is 1.04 times more volatile than Siam Global House. It trades about 0.15 of its potential returns per unit of risk. Siam Global House is currently generating about 0.06 per unit of risk. If you would invest  6,875  in Carabao Group Public on August 30, 2024 and sell it today you would earn a total of  1,125  from holding Carabao Group Public or generate 16.36% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthSignificant
Accuracy100.0%
ValuesDaily Returns

Carabao Group Public  vs.  Siam Global House

 Performance 
       Timeline  
Carabao Group Public 

Risk-Adjusted Performance

11 of 100

 
Weak
 
Strong
Good
Compared to the overall equity markets, risk-adjusted returns on investments in Carabao Group Public are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. Despite quite weak technical and fundamental indicators, Carabao Group disclosed solid returns over the last few months and may actually be approaching a breakup point.
Siam Global House 

Risk-Adjusted Performance

4 of 100

 
Weak
 
Strong
Insignificant
Compared to the overall equity markets, risk-adjusted returns on investments in Siam Global House are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. Despite somewhat strong basic indicators, Siam Global is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Carabao Group and Siam Global Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Carabao Group and Siam Global

The main advantage of trading using opposite Carabao Group and Siam Global positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Carabao Group position performs unexpectedly, Siam Global 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 Global will offset losses from the drop in Siam Global's long position.
The idea behind Carabao Group Public and Siam Global House 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 Investing Opportunities module to build portfolios using our predefined set of ideas and optimize them against your investing preferences.

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