Correlation Between Ngern Tid and Chayo Group

Can any of the company-specific risk be diversified away by investing in both Ngern Tid and Chayo Group 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 Ngern Tid and Chayo Group into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Ngern Tid Lor and Chayo Group Public, you can compare the effects of market volatilities on Ngern Tid and Chayo Group 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 Ngern Tid with a short position of Chayo Group. Check out your portfolio center. Please also check ongoing floating volatility patterns of Ngern Tid and Chayo Group.

Diversification Opportunities for Ngern Tid and Chayo Group

0.69

Correlation Coefficient

Ngern Tid  Chayo Group

Poor diversification

The 3 months correlation between Ngern and Chayo is 0.69. Overlapping area represents the amount of risk that can be diversified away by holding Ngern Tid Lor and Chayo Group Public in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Chayo Group Public and Ngern Tid 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 Ngern Tid Lor are associated (or correlated) with Chayo Group. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Chayo Group Public has no effect on the direction of Ngern Tid i.e., Ngern Tid and Chayo Group go up and down completely randomly.

Pair Corralation between Ngern Tid and Chayo Group

Assuming the 90 days trading horizon Ngern Tid Lor is expected to generate 1.36 times more return on investment than Chayo Group. However, Ngern Tid is 1.36 times more volatile than Chayo Group Public. It trades about -0.09 of its potential returns per unit of risk. Chayo Group Public is currently generating about -0.37 per unit of risk. If you would invest  1,792  in Ngern Tid Lor on October 20, 2024 and sell it today you would lose (272.00) from holding Ngern Tid Lor or give up 15.18% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	98.36%
Values	Daily Returns

Ngern Tid Lor  vs.  Chayo Group Public

Ngern Tid Lor

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Ngern Tid Lor has generated negative risk-adjusted returns adding no value to investors with long positions. Despite weak performance in the last few months, the Stock's fundamental indicators 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.

Chayo Group Public

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Chayo Group Public has generated negative risk-adjusted returns adding no value to investors with long positions. Despite weak 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.

Pair Trading with Ngern Tid and Chayo Group

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

The idea behind Ngern Tid Lor and Chayo Group 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 Portfolio Volatility module to check portfolio volatility and analyze historical return density to properly model market risk.