Correlation Between Siri Prime and SiamEast Solutions

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

By analyzing existing cross correlation between Siri Prime Office and SiamEast Solutions Public, you can compare the effects of market volatilities on Siri Prime and SiamEast Solutions 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 Siri Prime with a short position of SiamEast Solutions. Check out your portfolio center. Please also check ongoing floating volatility patterns of Siri Prime and SiamEast Solutions.

Diversification Opportunities for Siri Prime and SiamEast Solutions

0.8

Correlation Coefficient

Siri Prime  SiamEast Solutions

Very poor diversification

The 3 months correlation between Siri and SiamEast is 0.8. Overlapping area represents the amount of risk that can be diversified away by holding Siri Prime Office and SiamEast Solutions Public in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SiamEast Solutions Public and Siri Prime 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 Siri Prime Office are associated (or correlated) with SiamEast Solutions. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of SiamEast Solutions Public has no effect on the direction of Siri Prime i.e., Siri Prime and SiamEast Solutions go up and down completely randomly.

Pair Corralation between Siri Prime and SiamEast Solutions

Assuming the 90 days trading horizon Siri Prime Office is expected to generate 0.72 times more return on investment than SiamEast Solutions. However, Siri Prime Office is 1.38 times less risky than SiamEast Solutions. It trades about -0.07 of its potential returns per unit of risk. SiamEast Solutions Public is currently generating about -0.09 per unit of risk. If you would invest  171.00  in Siri Prime Office on December 27, 2024 and sell it today you would lose (12.00) from holding Siri Prime Office or give up 7.02% of portfolio value over 90 days.

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

Siri Prime Office  vs.  SiamEast Solutions Public

Siri Prime Office

Risk-Adjusted Performance

Very Weak

Over the last 90 days Siri Prime Office has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest conflicting performance, the Stock's forward-looking signals remain persistent and the latest mess on Wall Street may also be a sign of long-standing gains for the company institutional investors.

SiamEast Solutions Public

Risk-Adjusted Performance

Very Weak

Over the last 90 days SiamEast Solutions Public has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest weak performance, the Stock's fundamental drivers 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 Siri Prime and SiamEast Solutions

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

The idea behind Siri Prime Office and SiamEast Solutions 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 Correlation Analysis module to reduce portfolio risk simply by holding instruments which are not perfectly correlated.