Correlation Between Pha Lai and Industrial Urban

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

By analyzing existing cross correlation between Pha Lai Thermal and Industrial Urban Development, you can compare the effects of market volatilities on Pha Lai and Industrial Urban 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 Pha Lai with a short position of Industrial Urban. Check out your portfolio center. Please also check ongoing floating volatility patterns of Pha Lai and Industrial Urban.

Diversification Opportunities for Pha Lai and Industrial Urban

0.43

Correlation Coefficient

Pha Lai  Industrial Urban

Very weak diversification

The 3 months correlation between Pha and Industrial is 0.43. Overlapping area represents the amount of risk that can be diversified away by holding Pha Lai Thermal and Industrial Urban Development in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Industrial Urban Dev and Pha Lai 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 Pha Lai Thermal are associated (or correlated) with Industrial Urban. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Industrial Urban Dev has no effect on the direction of Pha Lai i.e., Pha Lai and Industrial Urban go up and down completely randomly.

Pair Corralation between Pha Lai and Industrial Urban

Assuming the 90 days trading horizon Pha Lai Thermal is expected to under-perform the Industrial Urban. But the stock apears to be less risky and, when comparing its historical volatility, Pha Lai Thermal is 2.85 times less risky than Industrial Urban. The stock trades about -0.2 of its potential returns per unit of risk. The Industrial Urban Development is currently generating about -0.02 of returns per unit of risk over similar time horizon. If you would invest  4,050,000  in Industrial Urban Development on May 5, 2025 and sell it today you would lose (260,000) from holding Industrial Urban Development or give up 6.42% of portfolio value over 90 days.

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

Pha Lai Thermal  vs.  Industrial Urban Development

Pha Lai Thermal

Risk-Adjusted Performance

Very Weak

Over the last 90 days Pha Lai Thermal has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest unfluctuating performance, the Stock's fundamental indicators remain healthy and the recent disarray on Wall Street may also be a sign of long period gains for the firm investors.

Industrial Urban Dev

Risk-Adjusted Performance

Very Weak

Over the last 90 days Industrial Urban Development has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of very healthy fundamental indicators, Industrial Urban is not utilizing all of its potentials. The recent stock price disarray, may contribute to short-term losses for the investors.

Pair Trading with Pha Lai and Industrial Urban

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

The idea behind Pha Lai Thermal and Industrial Urban Development 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 Theme Ratings module to determine theme ratings based on digital equity recommendations. Macroaxis theme ratings are based on combination of fundamental analysis and risk-adjusted market performance.