Correlation Between Thai Coating and Central Retail

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

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

Diversification Opportunities for Thai Coating and Central Retail

0.17

Correlation Coefficient

Thai Coating  Central Retail

Average diversification

The 3 months correlation between Thai and Central is 0.17. Overlapping area represents the amount of risk that can be diversified away by holding Thai Coating Industrial and Central Retail in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Central Retail and Thai Coating 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 Thai Coating Industrial are associated (or correlated) with Central Retail. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Central Retail has no effect on the direction of Thai Coating i.e., Thai Coating and Central Retail go up and down completely randomly.

Pair Corralation between Thai Coating and Central Retail

Assuming the 90 days trading horizon Thai Coating Industrial is expected to generate 1.85 times more return on investment than Central Retail. However, Thai Coating is 1.85 times more volatile than Central Retail. It trades about -0.02 of its potential returns per unit of risk. Central Retail is currently generating about -0.17 per unit of risk. If you would invest  2,800  in Thai Coating Industrial on December 30, 2024 and sell it today you would lose (300.00) from holding Thai Coating Industrial or give up 10.71% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	98.41%
Values	Daily Returns

Thai Coating Industrial  vs.  Central Retail

Thai Coating Industrial

Risk-Adjusted Performance

Very Weak

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

Central Retail

Risk-Adjusted Performance

Very Weak

Over the last 90 days Central Retail 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 fundamental indicators remain quite persistent which may send shares a bit higher in April 2025. The latest mess may also be a sign of long-standing up-swing for the company institutional investors.

Pair Trading with Thai Coating and Central Retail

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

The idea behind Thai Coating Industrial and Central Retail 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.

Check out your portfolio center.

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 Alpha Finder module to use alpha and beta coefficients to find investment opportunities after accounting for the risk.