Correlation Between NAT ABSOLUTE and Siam Cement

Can any of the company-specific risk be diversified away by investing in both NAT ABSOLUTE and Siam Cement 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 NAT ABSOLUTE and Siam Cement into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between NAT ABSOLUTE TECHNOLOGIES and The Siam Cement, you can compare the effects of market volatilities on NAT ABSOLUTE and Siam Cement 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 NAT ABSOLUTE with a short position of Siam Cement. Check out your portfolio center. Please also check ongoing floating volatility patterns of NAT ABSOLUTE and Siam Cement.

Diversification Opportunities for NAT ABSOLUTE and Siam Cement

0.38

Correlation Coefficient

NAT ABSOLUTE  Siam Cement

Weak diversification

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

Pair Corralation between NAT ABSOLUTE and Siam Cement

Assuming the 90 days trading horizon NAT ABSOLUTE TECHNOLOGIES is expected to under-perform the Siam Cement. But the stock apears to be less risky and, when comparing its historical volatility, NAT ABSOLUTE TECHNOLOGIES is 2.19 times less risky than Siam Cement. The stock trades about -0.14 of its potential returns per unit of risk. The The Siam Cement is currently generating about -0.01 of returns per unit of risk over similar time horizon. If you would invest  17,150  in The Siam Cement on December 25, 2024 and sell it today you would lose (750.00) from holding The Siam Cement or give up 4.37% of portfolio value over 90 days.

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

NAT ABSOLUTE TECHNOLOGIES  vs.  The Siam Cement

NAT ABSOLUTE TECHNOLOGIES

Risk-Adjusted Performance

Very Weak

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

Siam Cement

Risk-Adjusted Performance

Very Weak

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

Pair Trading with NAT ABSOLUTE and Siam Cement

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

The idea behind NAT ABSOLUTE TECHNOLOGIES and The Siam Cement 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 Equity Analysis module to research over 250,000 global equities including funds, stocks and ETFs to find investment opportunities.