Correlation Between Siam Cement and Regional Container

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

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

Diversification Opportunities for Siam Cement and Regional Container

0.54

Correlation Coefficient

Siam Cement  Regional Container

Very weak diversification

The 3 months correlation between Siam and Regional is 0.54. Overlapping area represents the amount of risk that can be diversified away by holding The Siam Cement and Regional Container Lines in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Regional Container Lines and Siam Cement 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 Cement are associated (or correlated) with Regional Container. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Regional Container Lines has no effect on the direction of Siam Cement i.e., Siam Cement and Regional Container go up and down completely randomly.

Pair Corralation between Siam Cement and Regional Container

Assuming the 90 days trading horizon The Siam Cement is expected to generate 1.45 times more return on investment than Regional Container. However, Siam Cement is 1.45 times more volatile than Regional Container Lines. It trades about -0.03 of its potential returns per unit of risk. Regional Container Lines is currently generating about -0.09 per unit of risk. If you would invest  16,800  in The Siam Cement on December 30, 2024 and sell it today you would lose (1,450) from holding The Siam Cement or give up 8.63% of portfolio value over 90 days.

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

The Siam Cement  vs.  Regional Container Lines

Siam Cement

Risk-Adjusted Performance

Very Weak

Over the last 90 days The Siam Cement has generated negative risk-adjusted returns adding no value to investors with long positions. Despite quite persistent fundamental indicators, Siam Cement is not utilizing all of its potentials. The current stock price mess, may contribute to short-term losses for the institutional investors.

Regional Container Lines

Risk-Adjusted Performance

Very Weak

Over the last 90 days Regional Container Lines has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest conflicting performance, the Stock's essential 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 Siam Cement and Regional Container

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

The idea behind The Siam Cement and Regional Container Lines 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 Instant Ratings module to determine any equity ratings based on digital recommendations. Macroaxis instant equity ratings are based on combination of fundamental analysis and risk-adjusted market performance.