Correlation Between Pacific Pipe and MFC Nichada

Can any of the company-specific risk be diversified away by investing in both Pacific Pipe and MFC Nichada 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 Pacific Pipe and MFC Nichada into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Pacific Pipe Public and MFC Nichada Thani Property, you can compare the effects of market volatilities on Pacific Pipe and MFC Nichada 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 Pacific Pipe with a short position of MFC Nichada. Check out your portfolio center. Please also check ongoing floating volatility patterns of Pacific Pipe and MFC Nichada.

Diversification Opportunities for Pacific Pipe and MFC Nichada

-0.7

Correlation Coefficient

Pacific Pipe  MFC Nichada

Excellent diversification

The 3 months correlation between Pacific and MFC is -0.7. Overlapping area represents the amount of risk that can be diversified away by holding Pacific Pipe Public and MFC Nichada Thani Property in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on MFC Nichada Thani and Pacific Pipe 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 Pacific Pipe Public are associated (or correlated) with MFC Nichada. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of MFC Nichada Thani has no effect on the direction of Pacific Pipe i.e., Pacific Pipe and MFC Nichada go up and down completely randomly.

Pair Corralation between Pacific Pipe and MFC Nichada

Assuming the 90 days trading horizon Pacific Pipe Public is expected to generate 2.28 times more return on investment than MFC Nichada. However, Pacific Pipe is 2.28 times more volatile than MFC Nichada Thani Property. It trades about 0.12 of its potential returns per unit of risk. MFC Nichada Thani Property is currently generating about 0.04 per unit of risk. If you would invest  145.00  in Pacific Pipe Public on April 23, 2025 and sell it today you would earn a total of  36.00  from holding Pacific Pipe Public or generate 24.83% return on investment over 90 days.

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

Pacific Pipe Public  vs.  MFC Nichada Thani Property

Pacific Pipe Public

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Pacific Pipe Public are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. Despite quite conflicting basic indicators, Pacific Pipe disclosed solid returns over the last few months and may actually be approaching a breakup point.

MFC Nichada Thani

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in MFC Nichada Thani Property are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. Despite quite persistent forward-looking signals, MFC Nichada is not utilizing all of its potentials. The latest stock price mess, may contribute to short-term losses for the institutional investors.

Pair Trading with Pacific Pipe and MFC Nichada

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

The idea behind Pacific Pipe Public and MFC Nichada Thani Property 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 AI Portfolio Architect module to use AI to generate optimal portfolios and find profitable investment opportunities.