Correlation Between Muangthai Capital and Ngern Tid

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

By analyzing existing cross correlation between Muangthai Capital Public and Ngern Tid Lor, you can compare the effects of market volatilities on Muangthai Capital and Ngern Tid 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 Muangthai Capital with a short position of Ngern Tid. Check out your portfolio center. Please also check ongoing floating volatility patterns of Muangthai Capital and Ngern Tid.

Diversification Opportunities for Muangthai Capital and Ngern Tid

0.95

Correlation Coefficient

Muangthai Capital  Ngern Tid

Almost no diversification

The 3 months correlation between Muangthai and Ngern is 0.95. Overlapping area represents the amount of risk that can be diversified away by holding Muangthai Capital Public and Ngern Tid Lor in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Ngern Tid Lor and Muangthai Capital 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 Muangthai Capital Public are associated (or correlated) with Ngern Tid. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Ngern Tid Lor has no effect on the direction of Muangthai Capital i.e., Muangthai Capital and Ngern Tid go up and down completely randomly.

Pair Corralation between Muangthai Capital and Ngern Tid

Assuming the 90 days trading horizon Muangthai Capital Public is expected to generate 1.0 times more return on investment than Ngern Tid. However, Muangthai Capital Public is 1.0 times less risky than Ngern Tid. It trades about 0.11 of its potential returns per unit of risk. Ngern Tid Lor is currently generating about 0.11 per unit of risk. If you would invest  4,375  in Muangthai Capital Public on September 2, 2024 and sell it today you would earn a total of  550.00  from holding Muangthai Capital Public or generate 12.57% return on investment over 90 days.

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

Muangthai Capital Public  vs.  Ngern Tid Lor

Muangthai Capital Public

Risk-Adjusted Performance

8 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Muangthai Capital Public are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. Despite quite weak fundamental indicators, Muangthai Capital disclosed solid returns over the last few months and may actually be approaching a breakup point.

Ngern Tid Lor

Risk-Adjusted Performance

8 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Ngern Tid Lor are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. Despite somewhat conflicting fundamental indicators, Ngern Tid sustained solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Muangthai Capital and Ngern Tid

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

The idea behind Muangthai Capital Public and Ngern Tid Lor 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 Efficient Frontier module to plot and analyze your portfolio and positions against risk-return landscape of the market..