Correlation Between Cho Thavee and Hydrotek Public

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

Diversification Opportunities for Cho Thavee and Hydrotek Public

-0.62

Correlation Coefficient

Cho Thavee  Hydrotek Public

Excellent diversification

The 3 months correlation between Cho and Hydrotek is -0.62. Overlapping area represents the amount of risk that can be diversified away by holding Cho Thavee Public and Hydrotek Public in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Hydrotek Public 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 Hydrotek Public. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Hydrotek Public has no effect on the direction of Cho Thavee i.e., Cho Thavee and Hydrotek Public go up and down completely randomly.

Pair Corralation between Cho Thavee and Hydrotek Public

Assuming the 90 days trading horizon Cho Thavee is expected to generate 2.93 times less return on investment than Hydrotek Public. In addition to that, Cho Thavee is 1.63 times more volatile than Hydrotek Public. It trades about 0.03 of its total potential returns per unit of risk. Hydrotek Public is currently generating about 0.13 per unit of volatility. If you would invest  88.00  in Hydrotek Public on December 30, 2024 and sell it today you would earn a total of  55.00  from holding Hydrotek Public or generate 62.5% return on investment over 90 days.

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

Cho Thavee Public  vs.  Hydrotek Public

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.

Hydrotek Public

Risk-Adjusted Performance

OK

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

Pair Trading with Cho Thavee and Hydrotek Public

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

The idea behind Cho Thavee Public and Hydrotek Public 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 Portfolio Comparator module to compare the composition, asset allocations and performance of any two portfolios in your account.