Correlation Between Central Pattana and AJ Advance

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

By analyzing existing cross correlation between Central Pattana Public and AJ Advance Technology, you can compare the effects of market volatilities on Central Pattana and AJ Advance 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 Pattana with a short position of AJ Advance. Check out your portfolio center. Please also check ongoing floating volatility patterns of Central Pattana and AJ Advance.

Diversification Opportunities for Central Pattana and AJ Advance

0.62

Correlation Coefficient

Central Pattana  AJ Advance

Poor diversification

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

Pair Corralation between Central Pattana and AJ Advance

Assuming the 90 days trading horizon Central Pattana Public is expected to generate 0.31 times more return on investment than AJ Advance. However, Central Pattana Public is 3.26 times less risky than AJ Advance. It trades about -0.12 of its potential returns per unit of risk. AJ Advance Technology is currently generating about -0.15 per unit of risk. If you would invest  6,300  in Central Pattana Public on September 5, 2024 and sell it today you would lose (250.00) from holding Central Pattana Public or give up 3.97% of portfolio value over 90 days.

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

Central Pattana Public  vs.  AJ Advance Technology

Central Pattana Public

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Central Pattana Public has generated negative risk-adjusted returns adding no value to investors with long positions. Despite quite persistent basic indicators, Central Pattana is not utilizing all of its potentials. The current stock price mess, may contribute to short-term losses for the institutional investors.

AJ Advance Technology

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days AJ Advance Technology has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest conflicting performance, the Stock's basic indicators remain persistent and the latest mess on Wall Street may also be a sign of long-standing gains for the company institutional investors.

Pair Trading with Central Pattana and AJ Advance

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

The idea behind Central Pattana Public and AJ Advance Technology 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.

Check out your portfolio center.

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 Performance Analysis module to check effects of mean-variance optimization against your current asset allocation.