Correlation Between North East and Somboon Advance

Can any of the company-specific risk be diversified away by investing in both North East and Somboon Advance 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 Somboon Advance 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 Somboon Advance Technology, you can compare the effects of market volatilities on North East and Somboon Advance 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 Somboon Advance. Check out your portfolio center. Please also check ongoing floating volatility patterns of North East and Somboon Advance.

Diversification Opportunities for North East and Somboon Advance

0.48

Correlation Coefficient

North East  Somboon Advance

Very weak diversification

The 3 months correlation between North and Somboon is 0.48. Overlapping area represents the amount of risk that can be diversified away by holding North East Rubbers and Somboon Advance Technology in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Somboon Advance Tech 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 Somboon Advance. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Somboon Advance Tech has no effect on the direction of North East i.e., North East and Somboon Advance go up and down completely randomly.

Pair Corralation between North East and Somboon Advance

Assuming the 90 days trading horizon North East is expected to generate 4.81 times less return on investment than Somboon Advance. But when comparing it to its historical volatility, North East Rubbers is 1.38 times less risky than Somboon Advance. It trades about 0.03 of its potential returns per unit of risk. Somboon Advance Technology is currently generating about 0.1 of returns per unit of risk over similar time horizon. If you would invest  1,080  in Somboon Advance Technology on December 2, 2024 and sell it today you would earn a total of  140.00  from holding Somboon Advance Technology or generate 12.96% return on investment over 90 days.

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

North East Rubbers  vs.  Somboon Advance Technology

North East Rubbers

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in North East Rubbers are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. 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.

Somboon Advance Tech

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Somboon Advance Technology are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. Despite quite conflicting basic indicators, Somboon Advance disclosed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with North East and Somboon Advance

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

The idea behind North East Rubbers and Somboon Advance Technology 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 Portfolio Holdings module to check your current holdings and cash postion to detemine if your portfolio needs rebalancing.