Correlation Between CENTRAL RETAIL and Thai Credit

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

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

Diversification Opportunities for CENTRAL RETAIL and Thai Credit

0.12

Correlation Coefficient

CENTRAL RETAIL  Thai Credit

Average diversification

The 3 months correlation between CENTRAL and Thai is 0.12. Overlapping area represents the amount of risk that can be diversified away by holding CENTRAL RETAIL P 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 CENTRAL 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 CENTRAL RETAIL P 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 CENTRAL RETAIL i.e., CENTRAL RETAIL and Thai Credit go up and down completely randomly.

Pair Corralation between CENTRAL RETAIL and Thai Credit

Assuming the 90 days trading horizon CENTRAL RETAIL P is expected to under-perform the Thai Credit. But the stock apears to be less risky and, when comparing its historical volatility, CENTRAL RETAIL P is 1.95 times less risky than Thai Credit. The stock trades about -0.13 of its potential returns per unit of risk. The Thai Credit Pcl is currently generating about -0.01 of returns per unit of risk over similar time horizon. If you would invest  1,880  in Thai Credit Pcl on October 12, 2024 and sell it today you would lose (90.00) from holding Thai Credit Pcl or give up 4.79% of portfolio value over 90 days.

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

CENTRAL RETAIL P  vs.  Thai Credit Pcl

CENTRAL RETAIL P

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days CENTRAL RETAIL P has generated negative risk-adjusted returns adding no value to investors with long positions. Despite conflicting performance in the last few months, the Stock's fundamental drivers remain somewhat strong which may send shares a bit higher in February 2025. The current disturbance may also be a sign of long term up-swing for the company investors.

Thai Credit Pcl

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Thai Credit Pcl has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong technical and fundamental indicators, Thai Credit is not utilizing all of its potentials. The latest stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with CENTRAL RETAIL and Thai Credit

The main advantage of trading using opposite CENTRAL RETAIL and Thai Credit positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if CENTRAL RETAIL 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 CENTRAL RETAIL P 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 Sign In To Macroaxis module to sign in to explore Macroaxis' wealth optimization platform and fintech modules.