Correlation Between Heng Leasing and Ratchthani Leasing

Can any of the company-specific risk be diversified away by investing in both Heng Leasing and Ratchthani Leasing 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 Ratchthani Leasing 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 Ratchthani Leasing Public, you can compare the effects of market volatilities on Heng Leasing and Ratchthani Leasing 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 Ratchthani Leasing. Check out your portfolio center. Please also check ongoing floating volatility patterns of Heng Leasing and Ratchthani Leasing.

Diversification Opportunities for Heng Leasing and Ratchthani Leasing

0.79

Correlation Coefficient

Heng Leasing  Ratchthani Leasing

Poor diversification

The 3 months correlation between Heng and Ratchthani is 0.79. Overlapping area represents the amount of risk that can be diversified away by holding Heng Leasing Capital and Ratchthani Leasing Public in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Ratchthani Leasing Public 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 Ratchthani Leasing. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Ratchthani Leasing Public has no effect on the direction of Heng Leasing i.e., Heng Leasing and Ratchthani Leasing go up and down completely randomly.

Pair Corralation between Heng Leasing and Ratchthani Leasing

Assuming the 90 days trading horizon Heng Leasing is expected to generate 10.37 times less return on investment than Ratchthani Leasing. But when comparing it to its historical volatility, Heng Leasing Capital is 2.0 times less risky than Ratchthani Leasing. It trades about 0.01 of its potential returns per unit of risk. Ratchthani Leasing Public is currently generating about 0.06 of returns per unit of risk over similar time horizon. If you would invest  153.00  in Ratchthani Leasing Public on December 24, 2024 and sell it today you would earn a total of  18.00  from holding Ratchthani Leasing Public or generate 11.76% return on investment over 90 days.

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

Heng Leasing Capital  vs.  Ratchthani Leasing Public

Heng Leasing Capital

Risk-Adjusted Performance

Weak

Over the last 90 days Heng Leasing Capital has generated negative risk-adjusted returns adding no value to investors with long positions. Despite quite persistent forward-looking signals, Heng Leasing is not utilizing all of its potentials. The latest stock price mess, may contribute to short-term losses for the institutional investors.

Ratchthani Leasing Public

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Ratchthani Leasing Public are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. Despite somewhat conflicting fundamental drivers, Ratchthani Leasing sustained solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Heng Leasing and Ratchthani Leasing

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

The idea behind Heng Leasing Capital and Ratchthani Leasing Public 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 Investing Opportunities module to build portfolios using our predefined set of ideas and optimize them against your investing preferences.