Correlation Between Singha Estate and Areeya Property

Can any of the company-specific risk be diversified away by investing in both Singha Estate and Areeya Property 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 Singha Estate and Areeya Property into the same portfolio, which is an essential part of the fundamental portfolio management process.

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

Diversification Opportunities for Singha Estate and Areeya Property

0.64

Correlation Coefficient

Singha Estate  Areeya Property

Poor diversification

The 3 months correlation between Singha and Areeya is 0.64. Overlapping area represents the amount of risk that can be diversified away by holding Singha Estate Public and Areeya Property Public in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Areeya Property Public and Singha Estate 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 Singha Estate Public are associated (or correlated) with Areeya Property. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Areeya Property Public has no effect on the direction of Singha Estate i.e., Singha Estate and Areeya Property go up and down completely randomly.

Pair Corralation between Singha Estate and Areeya Property

Assuming the 90 days trading horizon Singha Estate Public is expected to generate 3.6 times more return on investment than Areeya Property. However, Singha Estate is 3.6 times more volatile than Areeya Property Public. It trades about 0.08 of its potential returns per unit of risk. Areeya Property Public is currently generating about 0.0 per unit of risk. If you would invest  88.00  in Singha Estate Public on September 24, 2024 and sell it today you would earn a total of  3.00  from holding Singha Estate Public or generate 3.41% return on investment over 90 days.

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

Singha Estate Public  vs.  Areeya Property Public

Singha Estate Public

Risk-Adjusted Performance

8 of 100

OK

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

Areeya Property Public

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Areeya Property Public has generated negative risk-adjusted returns adding no value to investors with long positions. Despite quite persistent fundamental drivers, Areeya Property 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 Singha Estate and Areeya Property

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

The idea behind Singha Estate Public and Areeya Property 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 Odds Of Bankruptcy module to get analysis of equity chance of financial distress in the next 2 years.