Correlation Between Cho Thavee and Grande Asset

Can any of the company-specific risk be diversified away by investing in both Cho Thavee and Grande Asset 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 Cho Thavee and Grande Asset into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Cho Thavee Public and Grande Asset Hotels, you can compare the effects of market volatilities on Cho Thavee and Grande Asset 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 Cho Thavee with a short position of Grande Asset. Check out your portfolio center. Please also check ongoing floating volatility patterns of Cho Thavee and Grande Asset.

Diversification Opportunities for Cho Thavee and Grande Asset

0.32

Correlation Coefficient

Cho Thavee  Grande Asset

Weak diversification

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

Pair Corralation between Cho Thavee and Grande Asset

Assuming the 90 days trading horizon Cho Thavee Public is expected to generate 1.13 times more return on investment than Grande Asset. However, Cho Thavee is 1.13 times more volatile than Grande Asset Hotels. It trades about 0.03 of its potential returns per unit of risk. Grande Asset Hotels is currently generating about 0.02 per unit of risk. If you would invest  5.00  in Cho Thavee Public on December 29, 2024 and sell it today you would lose (2.00) from holding Cho Thavee Public or give up 40.0% of portfolio value over 90 days.

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

Cho Thavee Public  vs.  Grande Asset Hotels

Cho Thavee Public

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Cho Thavee Public are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. Despite quite weak basic indicators, Cho Thavee disclosed solid returns over the last few months and may actually be approaching a breakup point.

Grande Asset Hotels

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Grande Asset Hotels are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak fundamental drivers, Grande Asset sustained solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Cho Thavee and Grande Asset

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

The idea behind Cho Thavee Public and Grande Asset Hotels 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 Price Exposure Probability module to analyze equity upside and downside potential for a given time horizon across multiple markets.