Correlation Between Auto Trader and Bumrungrad Hospital
Can any of the company-specific risk be diversified away by investing in both Auto Trader and Bumrungrad Hospital 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 Auto Trader and Bumrungrad Hospital into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Auto Trader Group and Bumrungrad Hospital Public, you can compare the effects of market volatilities on Auto Trader and Bumrungrad Hospital 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 Auto Trader with a short position of Bumrungrad Hospital. Check out your portfolio center. Please also check ongoing floating volatility patterns of Auto Trader and Bumrungrad Hospital.
Diversification Opportunities for Auto Trader and Bumrungrad Hospital
0.79 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Auto and Bumrungrad is 0.79. Overlapping area represents the amount of risk that can be diversified away by holding Auto Trader Group and Bumrungrad Hospital Public in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Bumrungrad Hospital and Auto Trader 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 Auto Trader Group are associated (or correlated) with Bumrungrad Hospital. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Bumrungrad Hospital has no effect on the direction of Auto Trader i.e., Auto Trader and Bumrungrad Hospital go up and down completely randomly.
Pair Corralation between Auto Trader and Bumrungrad Hospital
Assuming the 90 days trading horizon Auto Trader is expected to generate 5.05 times less return on investment than Bumrungrad Hospital. But when comparing it to its historical volatility, Auto Trader Group is 4.4 times less risky than Bumrungrad Hospital. It trades about 0.07 of its potential returns per unit of risk. Bumrungrad Hospital Public is currently generating about 0.08 of returns per unit of risk over similar time horizon. If you would invest 82.00 in Bumrungrad Hospital Public on September 2, 2024 and sell it today you would earn a total of 478.00 from holding Bumrungrad Hospital Public or generate 582.93% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Auto Trader Group vs. Bumrungrad Hospital Public
Performance |
| Timeline |
| Auto Trader Group |
| Bumrungrad Hospital |
Auto Trader and Bumrungrad Hospital Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Auto Trader and Bumrungrad Hospital
The main advantage of trading using opposite Auto Trader and Bumrungrad Hospital positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Auto Trader position performs unexpectedly, Bumrungrad Hospital 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 Bumrungrad Hospital will offset losses from the drop in Bumrungrad Hospital's long position.| Auto Trader vs. Apple Inc | Auto Trader vs. Apple Inc | Auto Trader vs. Apple Inc | Auto Trader vs. Apple Inc |
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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 Equity Search module to search for actively traded equities including funds and ETFs from over 30 global markets.
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