Correlation Between Thai Steel and SVOA Public

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

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

Diversification Opportunities for Thai Steel and SVOA Public

-0.69

Correlation Coefficient

Thai Steel  SVOA Public

Excellent diversification

The 3 months correlation between Thai and SVOA is -0.69. Overlapping area represents the amount of risk that can be diversified away by holding Thai Steel Cable and SVOA Public in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SVOA Public and Thai 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 Thai Steel Cable are associated (or correlated) with SVOA Public. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of SVOA Public has no effect on the direction of Thai Steel i.e., Thai Steel and SVOA Public go up and down completely randomly.

Pair Corralation between Thai Steel and SVOA Public

Assuming the 90 days trading horizon Thai Steel Cable is expected to generate 0.4 times more return on investment than SVOA Public. However, Thai Steel Cable is 2.48 times less risky than SVOA Public. It trades about 0.13 of its potential returns per unit of risk. SVOA Public is currently generating about -0.38 per unit of risk. If you would invest  1,430  in Thai Steel Cable on October 24, 2024 and sell it today you would earn a total of  80.00  from holding Thai Steel Cable or generate 5.59% return on investment over 90 days.

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

Thai Steel Cable  vs.  SVOA Public

Thai Steel Cable

Risk-Adjusted Performance

9 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Thai Steel Cable are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. Despite quite persistent fundamental indicators, Thai Steel is not utilizing all of its potentials. The latest stock price mess, may contribute to short-term losses for the institutional investors.

SVOA Public

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days SVOA Public has generated negative risk-adjusted returns adding no value to investors with long positions. Despite conflicting performance in the last few months, the Stock's forward-looking signals remain quite persistent which may send shares a bit higher in February 2025. The latest mess may also be a sign of long-standing up-swing for the company institutional investors.

Pair Trading with Thai Steel and SVOA Public

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

The idea behind Thai Steel Cable and SVOA 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 Economic Indicators module to top statistical indicators that provide insights into how an economy is performing.