Correlation Between Teka Construction and TKrungthai Industries

Can any of the company-specific risk be diversified away by investing in both Teka Construction and TKrungthai Industries 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 Teka Construction and TKrungthai Industries into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Teka Construction PCL and TKrungthai Industries Public, you can compare the effects of market volatilities on Teka Construction and TKrungthai Industries 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 Teka Construction with a short position of TKrungthai Industries. Check out your portfolio center. Please also check ongoing floating volatility patterns of Teka Construction and TKrungthai Industries.

Diversification Opportunities for Teka Construction and TKrungthai Industries

0.59

Correlation Coefficient

Teka Construction  TKrungthai Industries

Very weak diversification

The 3 months correlation between Teka and TKrungthai is 0.59. Overlapping area represents the amount of risk that can be diversified away by holding Teka Construction PCL and TKrungthai Industries Public in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on TKrungthai Industries and Teka Construction 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 Teka Construction PCL are associated (or correlated) with TKrungthai Industries. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of TKrungthai Industries has no effect on the direction of Teka Construction i.e., Teka Construction and TKrungthai Industries go up and down completely randomly.

Pair Corralation between Teka Construction and TKrungthai Industries

Assuming the 90 days trading horizon Teka Construction PCL is expected to generate 0.5 times more return on investment than TKrungthai Industries. However, Teka Construction PCL is 2.01 times less risky than TKrungthai Industries. It trades about -0.06 of its potential returns per unit of risk. TKrungthai Industries Public is currently generating about -0.19 per unit of risk. If you would invest  208.00  in Teka Construction PCL on December 31, 2024 and sell it today you would lose (13.00) from holding Teka Construction PCL or give up 6.25% of portfolio value over 90 days.

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

Teka Construction PCL  vs.  TKrungthai Industries Public

Teka Construction PCL

Risk-Adjusted Performance

Very Weak

Over the last 90 days Teka Construction PCL has generated negative risk-adjusted returns adding no value to investors with long positions. Despite quite persistent forward-looking signals, Teka Construction is not utilizing all of its potentials. The latest stock price mess, may contribute to short-term losses for the institutional investors.

TKrungthai Industries

Risk-Adjusted Performance

Very Weak

Over the last 90 days TKrungthai Industries Public 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 basic indicators remain quite persistent which may send shares a bit higher in May 2025. The latest mess may also be a sign of long-standing up-swing for the company institutional investors.

Pair Trading with Teka Construction and TKrungthai Industries

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

The idea behind Teka Construction PCL and TKrungthai Industries 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.

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 Portfolio Backtesting module to avoid under-diversification and over-optimization by backtesting your portfolios.