Correlation Between Cho Thavee and Ngern Tid

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

Diversification Opportunities for Cho Thavee and Ngern Tid

0.29

Correlation Coefficient

Cho Thavee  Ngern Tid

Modest diversification

The 3 months correlation between Cho and Ngern is 0.29. Overlapping area represents the amount of risk that can be diversified away by holding Cho Thavee Public and Ngern Tid Lor in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Ngern Tid Lor 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 Ngern Tid. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Ngern Tid Lor has no effect on the direction of Cho Thavee i.e., Cho Thavee and Ngern Tid go up and down completely randomly.

Pair Corralation between Cho Thavee and Ngern Tid

Assuming the 90 days trading horizon Cho Thavee Public is expected to generate 5.67 times more return on investment than Ngern Tid. However, Cho Thavee is 5.67 times more volatile than Ngern Tid Lor. It trades about 0.03 of its potential returns per unit of risk. Ngern Tid Lor is currently generating about -0.06 per unit of risk. If you would invest  5.00  in Cho Thavee Public on December 30, 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.  Ngern Tid Lor

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.

Ngern Tid Lor

Risk-Adjusted Performance

Very Weak

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

Pair Trading with Cho Thavee and Ngern Tid

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

The idea behind Cho Thavee Public and Ngern Tid Lor 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 Risk-Return Analysis module to view associations between returns expected from investment and the risk you assume.