Correlation Between Central Retail and Thai Rubber

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

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

Diversification Opportunities for Central Retail and Thai Rubber

0.41

Correlation Coefficient

Central Retail  Thai Rubber

Very weak diversification

The 3 months correlation between Central and Thai is 0.41. Overlapping area represents the amount of risk that can be diversified away by holding Central Retail and Thai Rubber Latex in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Thai Rubber Latex 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 Thai Rubber. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Thai Rubber Latex has no effect on the direction of Central Retail i.e., Central Retail and Thai Rubber go up and down completely randomly.

Pair Corralation between Central Retail and Thai Rubber

Assuming the 90 days trading horizon Central Retail is expected to generate 0.84 times more return on investment than Thai Rubber. However, Central Retail is 1.19 times less risky than Thai Rubber. It trades about -0.17 of its potential returns per unit of risk. Thai Rubber Latex is currently generating about -0.16 per unit of risk. If you would invest  3,400  in Central Retail on December 30, 2024 and sell it today you would lose (850.00) from holding Central Retail or give up 25.0% of portfolio value over 90 days.

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

Central Retail  vs.  Thai Rubber Latex

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 conflicting 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.

Thai Rubber Latex

Risk-Adjusted Performance

Very Weak

Over the last 90 days Thai Rubber Latex 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 April 2025. The current disturbance may also be a sign of long term up-swing for the company investors.

Pair Trading with Central Retail and Thai Rubber

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

The idea behind Central Retail and Thai Rubber Latex 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 Positions Ratings module to determine portfolio positions ratings based on digital equity recommendations. Macroaxis instant position ratings are based on combination of fundamental analysis and risk-adjusted market performance.