Correlation Between Heng Leasing and Thai German

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

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

Diversification Opportunities for Heng Leasing and Thai German

0.72

Correlation Coefficient

Heng Leasing  Thai German

Poor diversification

The 3 months correlation between Heng and Thai is 0.72. Overlapping area represents the amount of risk that can be diversified away by holding Heng Leasing Capital and Thai German Products Public in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Thai German Products and Heng Leasing 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 Heng Leasing Capital are associated (or correlated) with Thai German. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Thai German Products has no effect on the direction of Heng Leasing i.e., Heng Leasing and Thai German go up and down completely randomly.

Pair Corralation between Heng Leasing and Thai German

Assuming the 90 days trading horizon Heng Leasing Capital is expected to generate 0.54 times more return on investment than Thai German. However, Heng Leasing Capital is 1.85 times less risky than Thai German. It trades about -0.17 of its potential returns per unit of risk. Thai German Products Public is currently generating about -0.11 per unit of risk. If you would invest  136.00  in Heng Leasing Capital on April 2, 2024 and sell it today you would lose (16.00) from holding Heng Leasing Capital or give up 11.76% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	95.0%
Values	Daily Returns

Heng Leasing Capital  vs.  Thai German Products Public

Heng Leasing Capital

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Heng Leasing Capital has generated negative risk-adjusted returns adding no value to investors with long positions. Despite weak performance in the last few months, the Stock's basic indicators remain quite persistent which may send shares a bit higher in August 2024. The latest mess may also be a sign of long-standing up-swing for the company institutional investors.

Thai German Products

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Thai German Products 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 basic indicators remain somewhat strong which may send shares a bit higher in August 2024. The current disturbance may also be a sign of long term up-swing for the company investors.

Pair Trading with Heng Leasing and Thai German

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

The idea behind Heng Leasing Capital and Thai German Products 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.

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 Global Correlations module to find global opportunities by holding instruments from different markets.