Correlation Between Advanced Information and Ratchaphruek Hospital
Can any of the company-specific risk be diversified away by investing in both Advanced Information and Ratchaphruek 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 Advanced Information and Ratchaphruek Hospital into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Advanced Information Technology and Ratchaphruek Hospital Public, you can compare the effects of market volatilities on Advanced Information and Ratchaphruek 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 Advanced Information with a short position of Ratchaphruek Hospital. Check out your portfolio center. Please also check ongoing floating volatility patterns of Advanced Information and Ratchaphruek Hospital.
Diversification Opportunities for Advanced Information and Ratchaphruek Hospital
0.95 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between Advanced and Ratchaphruek is 0.95. Overlapping area represents the amount of risk that can be diversified away by holding Advanced Information Technolog and Ratchaphruek Hospital Public in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Ratchaphruek Hospital and Advanced Information 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 Advanced Information Technology are associated (or correlated) with Ratchaphruek Hospital. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Ratchaphruek Hospital has no effect on the direction of Advanced Information i.e., Advanced Information and Ratchaphruek Hospital go up and down completely randomly.
Pair Corralation between Advanced Information and Ratchaphruek Hospital
Assuming the 90 days trading horizon Advanced Information Technology is expected to generate 1.0 times more return on investment than Ratchaphruek Hospital. However, Advanced Information Technology is 1.0 times less risky than Ratchaphruek Hospital. It trades about 0.11 of its potential returns per unit of risk. Ratchaphruek Hospital Public is currently generating about 0.11 per unit of risk. If you would invest 402.00 in Advanced Information Technology on September 2, 2024 and sell it today you would earn a total of 30.00 from holding Advanced Information Technology or generate 7.46% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Advanced Information Technolog vs. Ratchaphruek Hospital Public
Performance |
| Timeline |
| Advanced Information |
| Ratchaphruek Hospital |
Advanced Information and Ratchaphruek Hospital Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Advanced Information and Ratchaphruek Hospital
The main advantage of trading using opposite Advanced Information and Ratchaphruek Hospital positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Advanced Information position performs unexpectedly, Ratchaphruek 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 Ratchaphruek Hospital will offset losses from the drop in Ratchaphruek Hospital's long position.| Advanced Information vs. AP Public | Advanced Information vs. Jasmine International Public | Advanced Information vs. Asia Plus Group | Advanced Information vs. Bangchak Public |
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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 Efficient Frontier module to plot and analyze your portfolio and positions against risk-return landscape of the market..
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