Correlation Between Ratch Group and Siam City

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

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

Diversification Opportunities for Ratch Group and Siam City

0.5

Correlation Coefficient

Ratch Group  Siam City

Very weak diversification

The 3 months correlation between Ratch and Siam is 0.5. Overlapping area represents the amount of risk that can be diversified away by holding Ratch Group Public and Siam City Cement in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Siam City Cement and Ratch Group 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 Ratch Group Public are associated (or correlated) with Siam City. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Siam City Cement has no effect on the direction of Ratch Group i.e., Ratch Group and Siam City go up and down completely randomly.

Pair Corralation between Ratch Group and Siam City

Assuming the 90 days trading horizon Ratch Group Public is expected to under-perform the Siam City. In addition to that, Ratch Group is 1.48 times more volatile than Siam City Cement. It trades about -0.08 of its total potential returns per unit of risk. Siam City Cement is currently generating about -0.08 per unit of volatility. If you would invest  16,750  in Siam City Cement on October 7, 2024 and sell it today you would lose (450.00) from holding Siam City Cement or give up 2.69% of portfolio value over 90 days.

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

Ratch Group Public  vs.  Siam City Cement

Ratch Group Public

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Ratch Group Public has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest conflicting performance, the Stock's fundamental drivers remain strong and the current disturbance on Wall Street may also be a sign of long term gains for the company investors.

Siam City Cement

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Siam City Cement has generated negative risk-adjusted returns adding no value to investors with long positions. Despite quite persistent forward-looking signals, Siam City 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 Ratch Group and Siam City

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

The idea behind Ratch Group Public and Siam City 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.

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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 Portfolio Rebalancing module to analyze risk-adjusted returns against different time horizons to find asset-allocation targets.