Correlation Between Siam Steel and Rockworth Public

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

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

Diversification Opportunities for Siam Steel and Rockworth Public

-0.16

Correlation Coefficient

Siam Steel  Rockworth Public

Good diversification

The 3 months correlation between Siam and Rockworth is -0.16. Overlapping area represents the amount of risk that can be diversified away by holding Siam Steel International and Rockworth Public in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Rockworth Public and Siam Steel 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 Siam Steel International are associated (or correlated) with Rockworth Public. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Rockworth Public has no effect on the direction of Siam Steel i.e., Siam Steel and Rockworth Public go up and down completely randomly.

Pair Corralation between Siam Steel and Rockworth Public

Assuming the 90 days trading horizon Siam Steel is expected to generate 1.14 times less return on investment than Rockworth Public. But when comparing it to its historical volatility, Siam Steel International is 1.0 times less risky than Rockworth Public. It trades about 0.04 of its potential returns per unit of risk. Rockworth Public is currently generating about 0.04 of returns per unit of risk over similar time horizon. If you would invest  775.00  in Rockworth Public on October 26, 2024 and sell it today you would earn a total of  265.00  from holding Rockworth Public or generate 34.19% return on investment over 90 days.

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

Siam Steel International  vs.  Rockworth Public

Siam Steel International

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Siam Steel International 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 forward-looking signals 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.

Rockworth Public

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Rockworth Public are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. Despite quite weak forward-looking signals, Rockworth Public disclosed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Siam Steel and Rockworth Public

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

The idea behind Siam Steel International and Rockworth 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 Equity Forecasting module to use basic forecasting models to generate price predictions and determine price momentum.