Correlation Between Somboon Advance and Central Retail

Can any of the company-specific risk be diversified away by investing in both Somboon Advance and Central Retail 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 Somboon Advance and Central Retail into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Somboon Advance Technology and Central Retail, you can compare the effects of market volatilities on Somboon Advance and Central Retail 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 Somboon Advance with a short position of Central Retail. Check out your portfolio center. Please also check ongoing floating volatility patterns of Somboon Advance and Central Retail.

Diversification Opportunities for Somboon Advance and Central Retail

-0.19

Correlation Coefficient

Somboon Advance  Central Retail

Good diversification

The 3 months correlation between Somboon and Central is -0.19. Overlapping area represents the amount of risk that can be diversified away by holding Somboon Advance Technology and Central Retail in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Central Retail and Somboon Advance 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 Somboon Advance Technology are associated (or correlated) with Central Retail. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Central Retail has no effect on the direction of Somboon Advance i.e., Somboon Advance and Central Retail go up and down completely randomly.

Pair Corralation between Somboon Advance and Central Retail

Assuming the 90 days trading horizon Somboon Advance Technology is expected to generate 1.14 times more return on investment than Central Retail. However, Somboon Advance is 1.14 times more volatile than Central Retail. It trades about 0.1 of its potential returns per unit of risk. Central Retail is currently generating about -0.05 per unit of risk. If you would invest  1,100  in Somboon Advance Technology on December 4, 2024 and sell it today you would earn a total of  140.00  from holding Somboon Advance Technology or generate 12.73% return on investment over 90 days.

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

Somboon Advance Technology  vs.  Central Retail

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.

Central Retail

Risk-Adjusted Performance

Very Weak

Over the last 90 days Central Retail has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest conflicting performance, the Stock's fundamental indicators remain persistent and the latest mess on Wall Street may also be a sign of long-standing gains for the company institutional investors.

Pair Trading with Somboon Advance and Central Retail

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

The idea behind Somboon Advance Technology and Central Retail 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 Positions Ratings module to determine portfolio positions ratings based on digital equity recommendations. Macroaxis instant position ratings are based on combination of fundamental analysis and risk-adjusted market performance.