Correlation Between Siam Technic and CPR Gomu

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

By analyzing existing cross correlation between Siam Technic Concrete and CPR Gomu Industrial, you can compare the effects of market volatilities on Siam Technic and CPR Gomu 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 Technic with a short position of CPR Gomu. Check out your portfolio center. Please also check ongoing floating volatility patterns of Siam Technic and CPR Gomu.

Diversification Opportunities for Siam Technic and CPR Gomu

0.55

Correlation Coefficient

Siam Technic  CPR Gomu

Very weak diversification

The 3 months correlation between Siam and CPR is 0.55. Overlapping area represents the amount of risk that can be diversified away by holding Siam Technic Concrete and CPR Gomu Industrial in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on CPR Gomu Industrial and Siam Technic 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 Technic Concrete are associated (or correlated) with CPR Gomu. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of CPR Gomu Industrial has no effect on the direction of Siam Technic i.e., Siam Technic and CPR Gomu go up and down completely randomly.

Pair Corralation between Siam Technic and CPR Gomu

Assuming the 90 days trading horizon Siam Technic Concrete is expected to generate 0.62 times more return on investment than CPR Gomu. However, Siam Technic Concrete is 1.62 times less risky than CPR Gomu. It trades about -0.07 of its potential returns per unit of risk. CPR Gomu Industrial is currently generating about -0.08 per unit of risk. If you would invest  106.00  in Siam Technic Concrete on December 29, 2024 and sell it today you would lose (6.00) from holding Siam Technic Concrete or give up 5.66% of portfolio value over 90 days.

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

Siam Technic Concrete  vs.  CPR Gomu Industrial

Siam Technic Concrete

Risk-Adjusted Performance

Very Weak

Over the last 90 days Siam Technic Concrete has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong fundamental drivers, Siam Technic is not utilizing all of its potentials. The latest stock price disturbance, may contribute to short-term losses for the investors.

CPR Gomu Industrial

Risk-Adjusted Performance

Very Weak

Over the last 90 days CPR Gomu Industrial has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest weak performance, the Stock's basic 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 Technic and CPR Gomu

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

The idea behind Siam Technic Concrete and CPR Gomu Industrial 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 Portfolio Holdings module to check your current holdings and cash postion to detemine if your portfolio needs rebalancing.