Correlation Between Heng Leasing and Thai Coating

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

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

Diversification Opportunities for Heng Leasing and Thai Coating

0.19

Correlation Coefficient

Heng Leasing  Thai Coating

Average diversification

The 3 months correlation between Heng and Thai is 0.19. Overlapping area represents the amount of risk that can be diversified away by holding Heng Leasing Capital and Thai Coating Industrial in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Thai Coating Industrial and Heng Leasing 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 Heng Leasing Capital are associated (or correlated) with Thai Coating. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Thai Coating Industrial has no effect on the direction of Heng Leasing i.e., Heng Leasing and Thai Coating go up and down completely randomly.

Pair Corralation between Heng Leasing and Thai Coating

Assuming the 90 days trading horizon Heng Leasing Capital is expected to under-perform the Thai Coating. But the stock apears to be less risky and, when comparing its historical volatility, Heng Leasing Capital is 1.83 times less risky than Thai Coating. The stock trades about -0.04 of its potential returns per unit of risk. The Thai Coating Industrial is currently generating about -0.02 of returns per unit of risk over similar time horizon. If you would invest  2,750  in Thai Coating Industrial on December 2, 2024 and sell it today you would lose (310.00) from holding Thai Coating Industrial or give up 11.27% of portfolio value over 90 days.

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

Heng Leasing Capital  vs.  Thai Coating Industrial

Heng Leasing Capital

Risk-Adjusted Performance

Very Weak

Over the last 90 days Heng Leasing Capital has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest conflicting performance, the Stock's forward-looking signals remain persistent and the latest mess on Wall Street may also be a sign of long-standing gains for the company institutional investors.

Thai Coating Industrial

Risk-Adjusted Performance

Very Weak

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

Pair Trading with Heng Leasing and Thai Coating

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

The idea behind Heng Leasing Capital and Thai Coating Industrial 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 Stock Screener module to find equities using a custom stock filter or screen asymmetry in trading patterns, price, volume, or investment outlook..