Correlation Between Thai Metal and Siam Steel

Can any of the company-specific risk be diversified away by investing in both Thai Metal and Siam 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 Thai Metal and Siam Steel 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 Siam Steel Service, you can compare the effects of market volatilities on Thai Metal and Siam 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 Thai Metal with a short position of Siam Steel. Check out your portfolio center. Please also check ongoing floating volatility patterns of Thai Metal and Siam Steel.

Diversification Opportunities for Thai Metal and Siam Steel

0.33

Correlation Coefficient

Thai Metal  Siam Steel

Weak diversification

The 3 months correlation between Thai and Siam is 0.33. Overlapping area represents the amount of risk that can be diversified away by holding Thai Metal Drum and Siam Steel Service in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Siam Steel Service 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 Siam Steel. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Siam Steel Service has no effect on the direction of Thai Metal i.e., Thai Metal and Siam Steel go up and down completely randomly.

Pair Corralation between Thai Metal and Siam Steel

Assuming the 90 days trading horizon Thai Metal is expected to generate 307.0 times less return on investment than Siam Steel. In addition to that, Thai Metal is 1.59 times more volatile than Siam Steel Service. It trades about 0.0 of its total potential returns per unit of risk. Siam Steel Service is currently generating about 0.09 per unit of volatility. If you would invest  202.00  in Siam Steel Service on December 26, 2024 and sell it today you would earn a total of  18.00  from holding Siam Steel Service or generate 8.91% return on investment over 90 days.

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

Thai Metal Drum  vs.  Siam Steel Service

Thai Metal Drum

Risk-Adjusted Performance

Very Weak

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

Siam Steel Service

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Siam Steel Service are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. Despite quite conflicting forward-looking signals, Siam Steel may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Pair Trading with Thai Metal and Siam Steel

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

The idea behind Thai Metal Drum and Siam Steel Service 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 Top Crypto Exchanges module to search and analyze digital assets across top global cryptocurrency exchanges.