Correlation Between SCB X and Central Pattana

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

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

Diversification Opportunities for SCB X and Central Pattana

-0.87

Correlation Coefficient

SCB X  Central Pattana

Pay attention - limited upside

The 3 months correlation between SCB and Central is -0.87. Overlapping area represents the amount of risk that can be diversified away by holding SCB X Public and Central Pattana Public in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Central Pattana Public and SCB X 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 SCB X Public are associated (or correlated) with Central Pattana. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Central Pattana Public has no effect on the direction of SCB X i.e., SCB X and Central Pattana go up and down completely randomly.

Pair Corralation between SCB X and Central Pattana

Assuming the 90 days trading horizon SCB X Public is expected to generate 0.8 times more return on investment than Central Pattana. However, SCB X Public is 1.24 times less risky than Central Pattana. It trades about 0.14 of its potential returns per unit of risk. Central Pattana Public is currently generating about -0.32 per unit of risk. If you would invest  11,500  in SCB X Public on September 26, 2024 and sell it today you would earn a total of  300.00  from holding SCB X Public or generate 2.61% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Significant
Accuracy	95.24%
Values	Daily Returns

SCB X Public  vs.  Central Pattana Public

SCB X Public

Risk-Adjusted Performance

8 of 100

OK

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

Central Pattana Public

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Central Pattana Public 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 January 2025. The latest mess may also be a sign of long-standing up-swing for the company institutional investors.

Pair Trading with SCB X and Central Pattana

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

The idea behind SCB X Public and Central Pattana 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 Premium Stories module to follow Macroaxis premium stories from verified contributors across different equity types, categories and coverage scope.