Correlation Between Pha Lai and Transport

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

Diversification Opportunities for Pha Lai and Transport

-0.65

Correlation Coefficient

Pha Lai  Transport

Excellent diversification

The 3 months correlation between Pha and Transport is -0.65. Overlapping area represents the amount of risk that can be diversified away by holding Pha Lai Thermal and Transport and Industry in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Transport and Industry 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 Transport. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Transport and Industry has no effect on the direction of Pha Lai i.e., Pha Lai and Transport go up and down completely randomly.

Pair Corralation between Pha Lai and Transport

Assuming the 90 days trading horizon Pha Lai Thermal is expected to under-perform the Transport. But the stock apears to be less risky and, when comparing its historical volatility, Pha Lai Thermal is 4.51 times less risky than Transport. The stock trades about -0.13 of its potential returns per unit of risk. The Transport and Industry is currently generating about 0.14 of returns per unit of risk over similar time horizon. If you would invest  205,000  in Transport and Industry on May 15, 2025 and sell it today you would earn a total of  75,000  from holding Transport and Industry or generate 36.59% return on investment over 90 days.

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

Pha Lai Thermal  vs.  Transport and Industry

Pha Lai Thermal

Risk-Adjusted Performance

Weakest

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.

Transport and Industry

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Transport and Industry are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. In spite of very unfluctuating fundamental indicators, Transport displayed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Pha Lai and Transport

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

The idea behind Pha Lai Thermal and Transport and Industry 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 ETF Categories module to list of ETF categories grouped based on various criteria, such as the investment strategy or type of investments.