Correlation Between Somboon Advance and Thai Rayon

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

Diversification Opportunities for Somboon Advance and Thai Rayon

0.79

Correlation Coefficient

Somboon Advance  Thai Rayon

Poor diversification

The 3 months correlation between Somboon and Thai is 0.79. Overlapping area represents the amount of risk that can be diversified away by holding Somboon Advance Technology and Thai Rayon Public in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Thai Rayon Public 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 Thai Rayon. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Thai Rayon Public has no effect on the direction of Somboon Advance i.e., Somboon Advance and Thai Rayon go up and down completely randomly.

Pair Corralation between Somboon Advance and Thai Rayon

Assuming the 90 days trading horizon Somboon Advance Technology is expected to under-perform the Thai Rayon. But the stock apears to be less risky and, when comparing its historical volatility, Somboon Advance Technology is 36.02 times less risky than Thai Rayon. The stock trades about -0.08 of its potential returns per unit of risk. The Thai Rayon Public is currently generating about 0.04 of returns per unit of risk over similar time horizon. If you would invest  4,764  in Thai Rayon Public on October 12, 2024 and sell it today you would lose (889.00) from holding Thai Rayon Public or give up 18.66% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	89.98%
Values	Daily Returns

Somboon Advance Technology  vs.  Thai Rayon Public

Somboon Advance Tech

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Somboon Advance Technology 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 basic indicators remain quite persistent which may send shares a bit higher in February 2025. The latest mess may also be a sign of long-standing up-swing for the company institutional investors.

Thai Rayon Public

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Thai Rayon Public has generated negative risk-adjusted returns adding no value to investors with long positions. Despite quite persistent fundamental drivers, Thai Rayon 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 Somboon Advance and Thai Rayon

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

The idea behind Somboon Advance Technology and Thai Rayon 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 Analyst Advice module to analyst recommendations and target price estimates broken down by several categories.