Correlation Between Thai Metal and SP Syndicate

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

By analyzing existing cross correlation between Thai Metal Drum and SP Syndicate Public, you can compare the effects of market volatilities on Thai Metal and SP Syndicate 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 Metal with a short position of SP Syndicate. Check out your portfolio center. Please also check ongoing floating volatility patterns of Thai Metal and SP Syndicate.

Diversification Opportunities for Thai Metal and SP Syndicate

0.16

Correlation Coefficient

Thai Metal  SP Syndicate

Average diversification

The 3 months correlation between Thai and SNP is 0.16. Overlapping area represents the amount of risk that can be diversified away by holding Thai Metal Drum and SP Syndicate Public in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SP Syndicate Public and Thai Metal 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 Metal Drum are associated (or correlated) with SP Syndicate. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of SP Syndicate Public has no effect on the direction of Thai Metal i.e., Thai Metal and SP Syndicate go up and down completely randomly.

Pair Corralation between Thai Metal and SP Syndicate

Assuming the 90 days trading horizon Thai Metal is expected to generate 1.57 times less return on investment than SP Syndicate. In addition to that, Thai Metal is 2.24 times more volatile than SP Syndicate Public. It trades about 0.05 of its total potential returns per unit of risk. SP Syndicate Public is currently generating about 0.17 per unit of volatility. If you would invest  1,004  in SP Syndicate Public on December 20, 2024 and sell it today you would earn a total of  136.00  from holding SP Syndicate Public or generate 13.55% return on investment over 90 days.

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

Thai Metal Drum  vs.  SP Syndicate Public

Thai Metal Drum

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Thai Metal Drum are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. Despite quite conflicting fundamental indicators, Thai Metal may actually be approaching a critical reversion point that can send shares even higher in April 2025.

SP Syndicate Public

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in SP Syndicate Public are ranked lower than 13 (%) of all global equities and portfolios over the last 90 days. Despite quite conflicting basic indicators, SP Syndicate disclosed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Thai Metal and SP Syndicate

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

The idea behind Thai Metal Drum and SP Syndicate 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 Idea Analyzer module to analyze all characteristics, volatility and risk-adjusted return of Macroaxis ideas.