Correlation Between Lease IT and Somboon Advance

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

By analyzing existing cross correlation between Lease IT Public and Somboon Advance Technology, you can compare the effects of market volatilities on Lease IT and Somboon Advance 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 Lease IT with a short position of Somboon Advance. Check out your portfolio center. Please also check ongoing floating volatility patterns of Lease IT and Somboon Advance.

Diversification Opportunities for Lease IT and Somboon Advance

0.8

Correlation Coefficient

Lease IT  Somboon Advance

Very poor diversification

The 3 months correlation between Lease and Somboon is 0.8. Overlapping area represents the amount of risk that can be diversified away by holding Lease IT Public and Somboon Advance Technology in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Somboon Advance Tech and Lease IT 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 Lease IT Public are associated (or correlated) with Somboon Advance. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Somboon Advance Tech has no effect on the direction of Lease IT i.e., Lease IT and Somboon Advance go up and down completely randomly.

Pair Corralation between Lease IT and Somboon Advance

Assuming the 90 days trading horizon Lease IT Public is expected to under-perform the Somboon Advance. In addition to that, Lease IT is 2.39 times more volatile than Somboon Advance Technology. It trades about -0.17 of its total potential returns per unit of risk. Somboon Advance Technology is currently generating about -0.19 per unit of volatility. If you would invest  1,280  in Somboon Advance Technology on September 13, 2024 and sell it today you would lose (180.00) from holding Somboon Advance Technology or give up 14.06% of portfolio value over 90 days.

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

Lease IT Public  vs.  Somboon Advance Technology

Lease IT Public

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Lease IT Public 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 basic indicators remain quite persistent which may send shares a bit higher in January 2025. The latest mess may also be a sign of long-standing up-swing for the company institutional investors.

Somboon Advance Tech

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Somboon Advance Technology 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 basic indicators remain quite persistent which may send shares a bit higher in January 2025. The latest mess may also be a sign of long-standing up-swing for the company institutional investors.

Pair Trading with Lease IT and Somboon Advance

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

The idea behind Lease IT Public and Somboon Advance Technology 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 Share Portfolio module to track or share privately all of your investments from the convenience of any device.