Correlation Between Central Plaza and Siam Wellness

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

By analyzing existing cross correlation between Central Plaza Hotel and Siam Wellness Group, you can compare the effects of market volatilities on Central Plaza and Siam Wellness 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 Central Plaza with a short position of Siam Wellness. Check out your portfolio center. Please also check ongoing floating volatility patterns of Central Plaza and Siam Wellness.

Diversification Opportunities for Central Plaza and Siam Wellness

0.32

Correlation Coefficient

Central Plaza  Siam Wellness

Weak diversification

The 3 months correlation between Central and Siam is 0.32. Overlapping area represents the amount of risk that can be diversified away by holding Central Plaza Hotel and Siam Wellness Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Siam Wellness Group and Central Plaza 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 Central Plaza Hotel are associated (or correlated) with Siam Wellness. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Siam Wellness Group has no effect on the direction of Central Plaza i.e., Central Plaza and Siam Wellness go up and down completely randomly.

Pair Corralation between Central Plaza and Siam Wellness

Assuming the 90 days trading horizon Central Plaza Hotel is expected to generate 1.02 times more return on investment than Siam Wellness. However, Central Plaza is 1.02 times more volatile than Siam Wellness Group. It trades about -0.05 of its potential returns per unit of risk. Siam Wellness Group is currently generating about -0.19 per unit of risk. If you would invest  3,450  in Central Plaza Hotel on December 30, 2024 and sell it today you would lose (425.00) from holding Central Plaza Hotel or give up 12.32% of portfolio value over 90 days.

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

Central Plaza Hotel  vs.  Siam Wellness Group

Central Plaza Hotel

Risk-Adjusted Performance

Very Weak

Over the last 90 days Central Plaza Hotel has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest conflicting performance, the Stock's basic indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for the company investors.

Siam Wellness Group

Risk-Adjusted Performance

Very Weak

Over the last 90 days Siam Wellness Group 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 basic indicators remain quite persistent which may send shares a bit higher in April 2025. The latest mess may also be a sign of long-standing up-swing for the company institutional investors.

Pair Trading with Central Plaza and Siam Wellness

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

The idea behind Central Plaza Hotel and Siam Wellness Group 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 Transaction History module to view history of all your transactions and understand their impact on performance.