Correlation Between Central Pattana and Castle Peak

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

Diversification Opportunities for Central Pattana and Castle Peak

0.45

Correlation Coefficient

Central Pattana  Castle Peak

Very weak diversification

The 3 months correlation between Central and Castle is 0.45. Overlapping area represents the amount of risk that can be diversified away by holding Central Pattana Public and Castle Peak Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Castle Peak Holdings 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 Castle Peak. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Castle Peak Holdings has no effect on the direction of Central Pattana i.e., Central Pattana and Castle Peak go up and down completely randomly.

Pair Corralation between Central Pattana and Castle Peak

Assuming the 90 days trading horizon Central Pattana Public is expected to under-perform the Castle Peak. But the stock apears to be less risky and, when comparing its historical volatility, Central Pattana Public is 1.03 times less risky than Castle Peak. The stock trades about -0.08 of its potential returns per unit of risk. The Castle Peak Holdings is currently generating about -0.02 of returns per unit of risk over similar time horizon. If you would invest  806.00  in Castle Peak Holdings on December 30, 2024 and sell it today you would lose (36.00) from holding Castle Peak Holdings or give up 4.47% of portfolio value over 90 days.

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

Central Pattana Public  vs.  Castle Peak Holdings

Central Pattana Public

Risk-Adjusted Performance

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 latest weak 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.

Castle Peak Holdings

Risk-Adjusted Performance

Very Weak

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

Pair Trading with Central Pattana and Castle Peak

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

The idea behind Central Pattana Public and Castle Peak Holdings 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.