Correlation Between Thai Nam and Well Graded

Can any of the company-specific risk be diversified away by investing in both Thai Nam and Well Graded 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 Well Graded 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 Well Graded Engineering, you can compare the effects of market volatilities on Thai Nam and Well Graded 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 Well Graded. Check out your portfolio center. Please also check ongoing floating volatility patterns of Thai Nam and Well Graded.

Diversification Opportunities for Thai Nam and Well Graded

0.57

Correlation Coefficient

Thai Nam  Well Graded

Very weak diversification

The 3 months correlation between Thai and Well is 0.57. Overlapping area represents the amount of risk that can be diversified away by holding Thai Nam Plastic and Well Graded Engineering in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Well Graded Engineering 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 Well Graded. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Well Graded Engineering has no effect on the direction of Thai Nam i.e., Thai Nam and Well Graded go up and down completely randomly.

Pair Corralation between Thai Nam and Well Graded

Assuming the 90 days trading horizon Thai Nam Plastic is expected to under-perform the Well Graded. But the stock apears to be less risky and, when comparing its historical volatility, Thai Nam Plastic is 1.45 times less risky than Well Graded. The stock trades about -0.08 of its potential returns per unit of risk. The Well Graded Engineering is currently generating about -0.05 of returns per unit of risk over similar time horizon. If you would invest  84.00  in Well Graded Engineering on September 13, 2024 and sell it today you would lose (9.00) from holding Well Graded Engineering or give up 10.71% of portfolio value over 90 days.

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

Thai Nam Plastic  vs.  Well Graded Engineering

Thai Nam Plastic

Risk-Adjusted Performance

0 of 100

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 latest conflicting performance, the Stock's forward-looking signals remain persistent and the latest mess on Wall Street may also be a sign of long-standing gains for the company institutional investors.

Well Graded Engineering

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Well Graded Engineering has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest weak performance, the Stock's technical and fundamental indicators remain persistent and the latest mess on Wall Street may also be a sign of long-standing gains for the company institutional investors.

Pair Trading with Thai Nam and Well Graded

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

The idea behind Thai Nam Plastic and Well Graded Engineering 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 Global Markets Map module to get a quick overview of global market snapshot using zoomable world map. Drill down to check world indexes.