Correlation Between TMT Steel and Thai Stanley

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

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

Diversification Opportunities for TMT Steel and Thai Stanley

0.13

Correlation Coefficient

TMT Steel  Thai Stanley

Average diversification

The 3 months correlation between TMT and Thai is 0.13. Overlapping area represents the amount of risk that can be diversified away by holding TMT Steel Public and Thai Stanley Electric in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Thai Stanley Electric and TMT Steel 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 TMT Steel Public are associated (or correlated) with Thai Stanley. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Thai Stanley Electric has no effect on the direction of TMT Steel i.e., TMT Steel and Thai Stanley go up and down completely randomly.

Pair Corralation between TMT Steel and Thai Stanley

Assuming the 90 days trading horizon TMT Steel is expected to generate 3.51 times less return on investment than Thai Stanley. In addition to that, TMT Steel is 4.93 times more volatile than Thai Stanley Electric. It trades about 0.0 of its total potential returns per unit of risk. Thai Stanley Electric is currently generating about 0.03 per unit of volatility. If you would invest  21,800  in Thai Stanley Electric on December 29, 2024 and sell it today you would earn a total of  200.00  from holding Thai Stanley Electric or generate 0.92% return on investment over 90 days.

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

TMT Steel Public  vs.  Thai Stanley Electric

TMT Steel Public

Risk-Adjusted Performance

Very Weak

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

Thai Stanley Electric

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Thai Stanley Electric are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. Despite somewhat strong basic indicators, Thai Stanley is not utilizing all of its potentials. The latest stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with TMT Steel and Thai Stanley

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

The idea behind TMT Steel Public and Thai Stanley Electric 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.

Check out your portfolio center.

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 Breakdown module to analyze constituents of all Macroaxis ideas. Macroaxis investment ideas are predefined, sector-focused investing themes.