Correlation Between Samchai Steel and Pacific Pipe

Can any of the company-specific risk be diversified away by investing in both Samchai Steel and Pacific Pipe 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 Samchai Steel and Pacific Pipe into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Samchai Steel Industries and Pacific Pipe Public, you can compare the effects of market volatilities on Samchai Steel and Pacific Pipe 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 Samchai Steel with a short position of Pacific Pipe. Check out your portfolio center. Please also check ongoing floating volatility patterns of Samchai Steel and Pacific Pipe.

Diversification Opportunities for Samchai Steel and Pacific Pipe

0.2

Correlation Coefficient

Samchai Steel  Pacific Pipe

Modest diversification

The 3 months correlation between Samchai and Pacific is 0.2. Overlapping area represents the amount of risk that can be diversified away by holding Samchai Steel Industries and Pacific Pipe Public in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Pacific Pipe Public and Samchai Steel 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 Samchai Steel Industries are associated (or correlated) with Pacific Pipe. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Pacific Pipe Public has no effect on the direction of Samchai Steel i.e., Samchai Steel and Pacific Pipe go up and down completely randomly.

Pair Corralation between Samchai Steel and Pacific Pipe

Assuming the 90 days trading horizon Samchai Steel Industries is expected to under-perform the Pacific Pipe. In addition to that, Samchai Steel is 1.71 times more volatile than Pacific Pipe Public. It trades about -0.11 of its total potential returns per unit of risk. Pacific Pipe Public is currently generating about 0.02 per unit of volatility. If you would invest  160.00  in Pacific Pipe Public on December 21, 2024 and sell it today you would earn a total of  1.00  from holding Pacific Pipe Public or generate 0.63% return on investment over 90 days.

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

Samchai Steel Industries  vs.  Pacific Pipe Public

Samchai Steel Industries

Risk-Adjusted Performance

Very Weak

Over the last 90 days Samchai Steel Industries 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 primary indicators remain quite persistent which may send shares a bit higher in April 2025. The latest mess may also be a sign of long-standing up-swing for the company institutional investors.

Pacific Pipe Public

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Pacific Pipe Public are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. Despite quite persistent basic indicators, Pacific Pipe 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 Samchai Steel and Pacific Pipe

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

The idea behind Samchai Steel Industries and Pacific Pipe 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 Fundamentals Comparison module to compare fundamentals across multiple equities to find investing opportunities.