Correlation Between Thantawan Industry and CSP Steel

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

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

Diversification Opportunities for Thantawan Industry and CSP Steel

0.05

Correlation Coefficient

Thantawan Industry  CSP Steel

Significant diversification

The 3 months correlation between Thantawan and CSP is 0.05. Overlapping area represents the amount of risk that can be diversified away by holding Thantawan Industry Public and CSP Steel Center in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on CSP Steel Center and Thantawan Industry 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 Thantawan Industry Public are associated (or correlated) with CSP Steel. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of CSP Steel Center has no effect on the direction of Thantawan Industry i.e., Thantawan Industry and CSP Steel go up and down completely randomly.

Pair Corralation between Thantawan Industry and CSP Steel

Assuming the 90 days trading horizon Thantawan Industry Public is expected to generate 0.44 times more return on investment than CSP Steel. However, Thantawan Industry Public is 2.26 times less risky than CSP Steel. It trades about -0.04 of its potential returns per unit of risk. CSP Steel Center is currently generating about -0.06 per unit of risk. If you would invest  2,875  in Thantawan Industry Public on December 3, 2024 and sell it today you would lose (100.00) from holding Thantawan Industry Public or give up 3.48% of portfolio value over 90 days.

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

Thantawan Industry Public  vs.  CSP Steel Center

Thantawan Industry Public

Risk-Adjusted Performance

Very Weak

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

CSP Steel Center

Risk-Adjusted Performance

Very Weak

Over the last 90 days CSP Steel Center has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest conflicting 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 Thantawan Industry and CSP Steel

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

The idea behind Thantawan Industry Public and CSP Steel Center 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 Anywhere module to track or share privately all of your investments from the convenience of any device.