Correlation Between Newcity Public and Samchai Steel

Can any of the company-specific risk be diversified away by investing in both Newcity Public and Samchai Steel 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 Newcity Public and Samchai Steel into the same portfolio, which is an essential part of the fundamental portfolio management process.

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

Diversification Opportunities for Newcity Public and Samchai Steel

-0.14

Correlation Coefficient

Newcity Public  Samchai Steel

Good diversification

The 3 months correlation between Newcity and Samchai is -0.14. Overlapping area represents the amount of risk that can be diversified away by holding Newcity Public and Samchai Steel Industries in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Samchai Steel Industries and Newcity Public 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 Newcity Public are associated (or correlated) with Samchai Steel. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Samchai Steel Industries has no effect on the direction of Newcity Public i.e., Newcity Public and Samchai Steel go up and down completely randomly.

Pair Corralation between Newcity Public and Samchai Steel

Assuming the 90 days horizon Newcity Public is expected to under-perform the Samchai Steel. But the stock apears to be less risky and, when comparing its historical volatility, Newcity Public is 3.52 times less risky than Samchai Steel. The stock trades about -0.14 of its potential returns per unit of risk. The Samchai Steel Industries is currently generating about 0.11 of returns per unit of risk over similar time horizon. If you would invest  13.00  in Samchai Steel Industries on October 6, 2024 and sell it today you would earn a total of  8.00  from holding Samchai Steel Industries or generate 61.54% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	98.33%
Values	Daily Returns

Newcity Public  vs.  Samchai Steel Industries

Newcity Public

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Newcity Public 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 fundamental drivers remain quite persistent which may send shares a bit higher in February 2025. The latest mess may also be a sign of long-standing up-swing for the company institutional investors.

Samchai Steel Industries

Risk-Adjusted Performance

8 of 100

OK

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

Pair Trading with Newcity Public and Samchai Steel

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

The idea behind Newcity Public and Samchai Steel Industries 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 Price Exposure Probability module to analyze equity upside and downside potential for a given time horizon across multiple markets.