Correlation Between Cho Thavee and Kingsmen CMTI

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

Diversification Opportunities for Cho Thavee and Kingsmen CMTI

-0.6

Correlation Coefficient

Cho Thavee  Kingsmen CMTI

Excellent diversification

The 3 months correlation between Cho and Kingsmen is -0.6. Overlapping area represents the amount of risk that can be diversified away by holding Cho Thavee Public and Kingsmen CMTI Public in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Kingsmen CMTI 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 Kingsmen CMTI. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Kingsmen CMTI Public has no effect on the direction of Cho Thavee i.e., Cho Thavee and Kingsmen CMTI go up and down completely randomly.

Pair Corralation between Cho Thavee and Kingsmen CMTI

Assuming the 90 days trading horizon Cho Thavee Public is expected to generate 7.21 times more return on investment than Kingsmen CMTI. However, Cho Thavee is 7.21 times more volatile than Kingsmen CMTI Public. It trades about 0.03 of its potential returns per unit of risk. Kingsmen CMTI Public is currently generating about 0.14 per unit of risk. If you would invest  5.00  in Cho Thavee Public on December 28, 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 Against
Strength	Weak
Accuracy	100.0%
Values	Daily Returns

Cho Thavee Public  vs.  Kingsmen CMTI Public

Cho Thavee Public

Risk-Adjusted Performance

Insignificant

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.

Kingsmen CMTI Public

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Kingsmen CMTI Public are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. Despite quite conflicting fundamental drivers, Kingsmen CMTI disclosed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Cho Thavee and Kingsmen CMTI

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

The idea behind Cho Thavee Public and Kingsmen CMTI 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 Stocks Directory module to find actively traded stocks across global markets.