Correlation Between Singha Estate and Amata Public

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

Diversification Opportunities for Singha Estate and Amata Public

-0.12

Correlation Coefficient

Singha Estate  Amata Public

Good diversification

The 3 months correlation between Singha and Amata is -0.12. Overlapping area represents the amount of risk that can be diversified away by holding Singha Estate Public and Amata Public in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Amata 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 Amata Public. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Amata Public has no effect on the direction of Singha Estate i.e., Singha Estate and Amata Public go up and down completely randomly.

Pair Corralation between Singha Estate and Amata Public

Assuming the 90 days trading horizon Singha Estate is expected to generate 1.01 times less return on investment than Amata Public. But when comparing it to its historical volatility, Singha Estate Public is 1.01 times less risky than Amata Public. It trades about 0.06 of its potential returns per unit of risk. Amata Public is currently generating about 0.06 of returns per unit of risk over similar time horizon. If you would invest  2,134  in Amata Public on September 23, 2024 and sell it today you would earn a total of  136.00  from holding Amata Public or generate 6.37% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	97.93%
Values	Daily Returns

Singha Estate Public  vs.  Amata 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.

Amata Public

Risk-Adjusted Performance

0 of 100

OK

Over the last 90 days Amata Public has generated negative risk-adjusted returns adding no value to investors with long positions. Even with relatively weak basic indicators, Amata Public reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Singha Estate and Amata Public

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

The idea behind Singha Estate Public and Amata 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 Investing Opportunities module to build portfolios using our predefined set of ideas and optimize them against your investing preferences.