Correlation Between CPN Retail and Central Pattana

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

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

Diversification Opportunities for CPN Retail and Central Pattana

0.75

Correlation Coefficient

CPN Retail  Central Pattana

Poor diversification

The 3 months correlation between CPN and Central is 0.75. Overlapping area represents the amount of risk that can be diversified away by holding CPN Retail Growth and Central Pattana Public in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Central Pattana Public and CPN Retail 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 CPN Retail Growth are associated (or correlated) with Central Pattana. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Central Pattana Public has no effect on the direction of CPN Retail i.e., CPN Retail and Central Pattana go up and down completely randomly.

Pair Corralation between CPN Retail and Central Pattana

Assuming the 90 days trading horizon CPN Retail Growth is expected to generate 1.04 times more return on investment than Central Pattana. However, CPN Retail is 1.04 times more volatile than Central Pattana Public. It trades about 0.08 of its potential returns per unit of risk. Central Pattana Public is currently generating about 0.02 per unit of risk. If you would invest  1,119  in CPN Retail Growth on September 3, 2024 and sell it today you would earn a total of  101.00  from holding CPN Retail Growth or generate 9.03% return on investment over 90 days.

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

CPN Retail Growth  vs.  Central Pattana Public

CPN Retail Growth

Risk-Adjusted Performance

6 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in CPN Retail Growth are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively conflicting basic indicators, CPN Retail may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Central Pattana Public

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Central Pattana Public are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. 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.

Pair Trading with CPN Retail and Central Pattana

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

The idea behind CPN Retail Growth and Central Pattana 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 Analyst Advice module to analyst recommendations and target price estimates broken down by several categories.