Correlation Between Federal Signal and Siamgas

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

By analyzing existing cross correlation between Federal Signal and Siamgas And Petrochemicals, you can compare the effects of market volatilities on Federal Signal and Siamgas 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 Federal Signal with a short position of Siamgas. Check out your portfolio center. Please also check ongoing floating volatility patterns of Federal Signal and Siamgas.

Diversification Opportunities for Federal Signal and Siamgas

0.2

Correlation Coefficient

Federal Signal  Siamgas

Modest diversification

The 3 months correlation between Federal and Siamgas is 0.2. Overlapping area represents the amount of risk that can be diversified away by holding Federal Signal and Siamgas And Petrochemicals in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Siamgas And Petroche and Federal Signal 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 Federal Signal are associated (or correlated) with Siamgas. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Siamgas And Petroche has no effect on the direction of Federal Signal i.e., Federal Signal and Siamgas go up and down completely randomly.

Pair Corralation between Federal Signal and Siamgas

Assuming the 90 days horizon Federal Signal is expected to generate 1.3 times less return on investment than Siamgas. But when comparing it to its historical volatility, Federal Signal is 3.27 times less risky than Siamgas. It trades about 0.08 of its potential returns per unit of risk. Siamgas And Petrochemicals is currently generating about 0.03 of returns per unit of risk over similar time horizon. If you would invest  18.00  in Siamgas And Petrochemicals on September 15, 2024 and sell it today you would earn a total of  0.00  from holding Siamgas And Petrochemicals or generate 0.0% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	99.64%
Values	Daily Returns

Federal Signal  vs.  Siamgas And Petrochemicals

Federal Signal

Risk-Adjusted Performance

10 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Federal Signal are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. Despite nearly uncertain basic indicators, Federal Signal reported solid returns over the last few months and may actually be approaching a breakup point.

Siamgas And Petroche

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Siamgas And Petrochemicals are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively stable basic indicators, Siamgas is not utilizing all of its potentials. The newest stock price uproar, may contribute to short-horizon losses for the private investors.

Pair Trading with Federal Signal and Siamgas

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

The idea behind Federal Signal and Siamgas And Petrochemicals 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 Dashboard module to portfolio dashboard that provides centralized access to all your investments.