Correlation Between Central Retail and Namwiwat Medical

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

By analyzing existing cross correlation between Central Retail and Namwiwat Medical, you can compare the effects of market volatilities on Central Retail and Namwiwat Medical 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 Namwiwat Medical. Check out your portfolio center. Please also check ongoing floating volatility patterns of Central Retail and Namwiwat Medical.

Diversification Opportunities for Central Retail and Namwiwat Medical

0.21

Correlation Coefficient

Central Retail  Namwiwat Medical

Modest diversification

The 3 months correlation between Central and Namwiwat is 0.21. Overlapping area represents the amount of risk that can be diversified away by holding Central Retail and Namwiwat Medical in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Namwiwat Medical 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 are associated (or correlated) with Namwiwat Medical. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Namwiwat Medical has no effect on the direction of Central Retail i.e., Central Retail and Namwiwat Medical go up and down completely randomly.

Pair Corralation between Central Retail and Namwiwat Medical

Assuming the 90 days trading horizon Central Retail is expected to under-perform the Namwiwat Medical. In addition to that, Central Retail is 1.61 times more volatile than Namwiwat Medical. It trades about -0.16 of its total potential returns per unit of risk. Namwiwat Medical is currently generating about -0.02 per unit of volatility. If you would invest  442.00  in Namwiwat Medical on December 24, 2024 and sell it today you would lose (10.00) from holding Namwiwat Medical or give up 2.26% of portfolio value over 90 days.

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

Central Retail  vs.  Namwiwat Medical

Central Retail

Risk-Adjusted Performance

Very Weak

Over the last 90 days Central Retail has generated negative risk-adjusted returns adding no value to investors with long positions. Despite weak performance in the last few months, the Stock's fundamental indicators remain quite persistent which may send shares a bit higher in April 2025. The latest mess may also be a sign of long-standing up-swing for the company institutional investors.

Namwiwat Medical

Risk-Adjusted Performance

Very Weak

Over the last 90 days Namwiwat Medical has generated negative risk-adjusted returns adding no value to investors with long positions. Despite quite persistent primary indicators, Namwiwat Medical 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 Retail and Namwiwat Medical

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

The idea behind Central Retail and Namwiwat Medical 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 Portfolio Holdings module to check your current holdings and cash postion to detemine if your portfolio needs rebalancing.