Correlation Between THONBURI HEALTHCARE and City Steel

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

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

Diversification Opportunities for THONBURI HEALTHCARE and City Steel

0.67

Correlation Coefficient

THONBURI HEALTHCARE  City Steel

Poor diversification

The 3 months correlation between THONBURI and City is 0.67. Overlapping area represents the amount of risk that can be diversified away by holding THONBURI HEALTHCARE GRO NVDR and City Steel Public in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on City Steel Public and THONBURI HEALTHCARE 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 THONBURI HEALTHCARE GRO NVDR are associated (or correlated) with City Steel. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of City Steel Public has no effect on the direction of THONBURI HEALTHCARE i.e., THONBURI HEALTHCARE and City Steel go up and down completely randomly.

Pair Corralation between THONBURI HEALTHCARE and City Steel

Assuming the 90 days trading horizon THONBURI HEALTHCARE GRO NVDR is expected to under-perform the City Steel. But the stock apears to be less risky and, when comparing its historical volatility, THONBURI HEALTHCARE GRO NVDR is 11.81 times less risky than City Steel. The stock trades about -0.04 of its potential returns per unit of risk. The City Steel Public is currently generating about 0.04 of returns per unit of risk over similar time horizon. If you would invest  212.00  in City Steel Public on October 10, 2024 and sell it today you would lose (28.00) from holding City Steel Public or give up 13.21% of portfolio value over 90 days.

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

THONBURI HEALTHCARE GRO NVDR  vs.  City Steel Public

THONBURI HEALTHCARE GRO

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days THONBURI HEALTHCARE GRO NVDR 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 drivers remain somewhat strong which may send shares a bit higher in February 2025. The current disturbance may also be a sign of long term up-swing for the company investors.

City Steel Public

Risk-Adjusted Performance

0 of 100

Very Weak

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

Pair Trading with THONBURI HEALTHCARE and City Steel

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

The idea behind THONBURI HEALTHCARE GRO NVDR and City Steel 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 Balance Of Power module to check stock momentum by analyzing Balance Of Power indicator and other technical ratios.