Correlation Between North East and Kiattana Transport

Can any of the company-specific risk be diversified away by investing in both North East and Kiattana Transport 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 North East and Kiattana Transport into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between North East Rubbers and Kiattana Transport Public, you can compare the effects of market volatilities on North East and Kiattana Transport 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 North East with a short position of Kiattana Transport. Check out your portfolio center. Please also check ongoing floating volatility patterns of North East and Kiattana Transport.

Diversification Opportunities for North East and Kiattana Transport

0.69

Correlation Coefficient

North East  Kiattana Transport

Poor diversification

The 3 months correlation between North and Kiattana is 0.69. Overlapping area represents the amount of risk that can be diversified away by holding North East Rubbers and Kiattana Transport Public in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Kiattana Transport Public and North East 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 North East Rubbers are associated (or correlated) with Kiattana Transport. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Kiattana Transport Public has no effect on the direction of North East i.e., North East and Kiattana Transport go up and down completely randomly.

Pair Corralation between North East and Kiattana Transport

Assuming the 90 days trading horizon North East Rubbers is expected to generate 0.57 times more return on investment than Kiattana Transport. However, North East Rubbers is 1.75 times less risky than Kiattana Transport. It trades about 0.0 of its potential returns per unit of risk. Kiattana Transport Public is currently generating about -0.1 per unit of risk. If you would invest  498.00  in North East Rubbers on October 23, 2024 and sell it today you would lose (4.00) from holding North East Rubbers or give up 0.8% of portfolio value over 90 days.

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

North East Rubbers  vs.  Kiattana Transport Public

North East Rubbers

Risk-Adjusted Performance

0 of 100

Very Weak

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

Kiattana Transport Public

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Kiattana Transport 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 forward-looking signals 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.

Pair Trading with North East and Kiattana Transport

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

The idea behind North East Rubbers and Kiattana Transport Public 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 Pair Correlation module to compare performance and examine fundamental relationship between any two equity instruments.