Correlation Between CPR Gomu and Thai Credit

Can any of the company-specific risk be diversified away by investing in both CPR Gomu and Thai Credit 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 CPR Gomu and Thai Credit into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between CPR Gomu Industrial and Thai Credit Pcl, you can compare the effects of market volatilities on CPR Gomu and Thai Credit 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 CPR Gomu with a short position of Thai Credit. Check out your portfolio center. Please also check ongoing floating volatility patterns of CPR Gomu and Thai Credit.

Diversification Opportunities for CPR Gomu and Thai Credit

-0.11

Correlation Coefficient

CPR Gomu  Thai Credit

Good diversification

The 3 months correlation between CPR and Thai is -0.11. Overlapping area represents the amount of risk that can be diversified away by holding CPR Gomu Industrial and Thai Credit Pcl in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Thai Credit Pcl and CPR Gomu 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 CPR Gomu Industrial are associated (or correlated) with Thai Credit. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Thai Credit Pcl has no effect on the direction of CPR Gomu i.e., CPR Gomu and Thai Credit go up and down completely randomly.

Pair Corralation between CPR Gomu and Thai Credit

Assuming the 90 days trading horizon CPR Gomu Industrial is expected to under-perform the Thai Credit. In addition to that, CPR Gomu is 1.02 times more volatile than Thai Credit Pcl. It trades about -0.07 of its total potential returns per unit of risk. Thai Credit Pcl is currently generating about 0.1 per unit of volatility. If you would invest  1,780  in Thai Credit Pcl on December 20, 2024 and sell it today you would earn a total of  220.00  from holding Thai Credit Pcl or generate 12.36% return on investment over 90 days.

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

CPR Gomu Industrial  vs.  Thai Credit Pcl

CPR Gomu Industrial

Risk-Adjusted Performance

Very Weak

Over the last 90 days CPR Gomu Industrial 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.

Thai Credit Pcl

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Thai Credit Pcl are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. Despite somewhat conflicting technical and fundamental indicators, Thai Credit sustained solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with CPR Gomu and Thai Credit

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

The idea behind CPR Gomu Industrial and Thai Credit Pcl 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 Portfolio File Import module to quickly import all of your third-party portfolios from your local drive in csv format.