Correlation Between Siam Commercial and Eastern Commercial

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

By analyzing existing cross correlation between The Siam Commercial and Eastern Commercial Leasing, you can compare the effects of market volatilities on Siam Commercial and Eastern Commercial 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 Siam Commercial with a short position of Eastern Commercial. Check out your portfolio center. Please also check ongoing floating volatility patterns of Siam Commercial and Eastern Commercial.

Diversification Opportunities for Siam Commercial and Eastern Commercial

-0.51

Correlation Coefficient

Siam Commercial  Eastern Commercial

Excellent diversification

The 3 months correlation between Siam and Eastern is -0.51. Overlapping area represents the amount of risk that can be diversified away by holding The Siam Commercial and Eastern Commercial Leasing in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Eastern Commercial and Siam Commercial 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 The Siam Commercial are associated (or correlated) with Eastern Commercial. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Eastern Commercial has no effect on the direction of Siam Commercial i.e., Siam Commercial and Eastern Commercial go up and down completely randomly.

Pair Corralation between Siam Commercial and Eastern Commercial

Assuming the 90 days trading horizon The Siam Commercial is expected to generate 0.3 times more return on investment than Eastern Commercial. However, The Siam Commercial is 3.35 times less risky than Eastern Commercial. It trades about 0.1 of its potential returns per unit of risk. Eastern Commercial Leasing is currently generating about -0.13 per unit of risk. If you would invest  11,479  in The Siam Commercial on December 1, 2024 and sell it today you would earn a total of  721.00  from holding The Siam Commercial or generate 6.28% return on investment over 90 days.

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

The Siam Commercial  vs.  Eastern Commercial Leasing

Siam Commercial

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in The Siam Commercial are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak fundamental drivers, Siam Commercial may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Eastern Commercial

Risk-Adjusted Performance

Very Weak

Over the last 90 days Eastern Commercial Leasing 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 essential 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.

Pair Trading with Siam Commercial and Eastern Commercial

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

The idea behind The Siam Commercial and Eastern Commercial Leasing 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 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.