Correlation Between Namwiwat Medical and SAF Special

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

By analyzing existing cross correlation between Namwiwat Medical and SAF Special Steel, you can compare the effects of market volatilities on Namwiwat Medical and SAF Special 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 Namwiwat Medical with a short position of SAF Special. Check out your portfolio center. Please also check ongoing floating volatility patterns of Namwiwat Medical and SAF Special.

Diversification Opportunities for Namwiwat Medical and SAF Special

0.38

Correlation Coefficient

Namwiwat Medical  SAF Special

Weak diversification

The 3 months correlation between Namwiwat and SAF is 0.38. Overlapping area represents the amount of risk that can be diversified away by holding Namwiwat Medical and SAF Special Steel in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SAF Special Steel and Namwiwat Medical 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 Namwiwat Medical are associated (or correlated) with SAF Special. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of SAF Special Steel has no effect on the direction of Namwiwat Medical i.e., Namwiwat Medical and SAF Special go up and down completely randomly.

Pair Corralation between Namwiwat Medical and SAF Special

Assuming the 90 days trading horizon Namwiwat Medical is expected to under-perform the SAF Special. But the stock apears to be less risky and, when comparing its historical volatility, Namwiwat Medical is 1.7 times less risky than SAF Special. The stock trades about -0.04 of its potential returns per unit of risk. The SAF Special Steel is currently generating about 0.04 of returns per unit of risk over similar time horizon. If you would invest  49.00  in SAF Special Steel on December 29, 2024 and sell it today you would earn a total of  2.00  from holding SAF Special Steel or generate 4.08% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	98.41%
Values	Daily Returns

Namwiwat Medical  vs.  SAF Special Steel

Namwiwat Medical

Risk-Adjusted Performance

Very Weak

Over the last 90 days Namwiwat Medical has generated negative risk-adjusted returns adding no value to investors with long positions. Despite quite persistent primary indicators, Namwiwat Medical is not utilizing all of its potentials. The current stock price mess, may contribute to short-term losses for the institutional investors.

SAF Special Steel

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in SAF Special Steel are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. Despite quite persistent technical and fundamental indicators, SAF Special is not utilizing all of its potentials. The current stock price mess, may contribute to short-term losses for the institutional investors.

Pair Trading with Namwiwat Medical and SAF Special

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

The idea behind Namwiwat Medical and SAF Special Steel 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 Analyst Advice module to analyst recommendations and target price estimates broken down by several categories.