Correlation Between Thai Nam and Thai Poly

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

By analyzing existing cross correlation between Thai Nam Plastic and Thai Poly Acrylic, you can compare the effects of market volatilities on Thai Nam and Thai Poly 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 Nam with a short position of Thai Poly. Check out your portfolio center. Please also check ongoing floating volatility patterns of Thai Nam and Thai Poly.

Diversification Opportunities for Thai Nam and Thai Poly

0.17

Correlation Coefficient

Thai Nam  Thai Poly

Average diversification

The 3 months correlation between Thai and Thai is 0.17. Overlapping area represents the amount of risk that can be diversified away by holding Thai Nam Plastic and Thai Poly Acrylic in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Thai Poly Acrylic and Thai Nam 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 Nam Plastic are associated (or correlated) with Thai Poly. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Thai Poly Acrylic has no effect on the direction of Thai Nam i.e., Thai Nam and Thai Poly go up and down completely randomly.

Pair Corralation between Thai Nam and Thai Poly

Assuming the 90 days trading horizon Thai Nam Plastic is expected to under-perform the Thai Poly. But the stock apears to be less risky and, when comparing its historical volatility, Thai Nam Plastic is 2.44 times less risky than Thai Poly. The stock trades about -0.02 of its potential returns per unit of risk. The Thai Poly Acrylic is currently generating about 0.02 of returns per unit of risk over similar time horizon. If you would invest  340.00  in Thai Poly Acrylic on December 21, 2024 and sell it today you would lose (20.00) from holding Thai Poly Acrylic or give up 5.88% of portfolio value over 90 days.

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

Thai Nam Plastic  vs.  Thai Poly Acrylic

Thai Nam Plastic

Risk-Adjusted Performance

Very Weak

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

Thai Poly Acrylic

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Thai Poly Acrylic are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. Despite quite weak basic indicators, Thai Poly may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Pair Trading with Thai Nam and Thai Poly

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

The idea behind Thai Nam Plastic and Thai Poly Acrylic 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 Portfolio File Import module to quickly import all of your third-party portfolios from your local drive in csv format.