Correlation Between Airports and BA Airport
Can any of the company-specific risk be diversified away by investing in both Airports and BA Airport 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 Airports and BA Airport into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Airports of Thailand and BA Airport Leasehold, you can compare the effects of market volatilities on Airports and BA Airport 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 Airports with a short position of BA Airport. Check out your portfolio center. Please also check ongoing floating volatility patterns of Airports and BA Airport.
Diversification Opportunities for Airports and BA Airport
0.15 | Correlation Coefficient |
Average diversification
The 3 months correlation between Airports and BAREIT is 0.15. Overlapping area represents the amount of risk that can be diversified away by holding Airports of Thailand and BA Airport Leasehold in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on BA Airport Leasehold and Airports 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 Airports of Thailand are associated (or correlated) with BA Airport. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of BA Airport Leasehold has no effect on the direction of Airports i.e., Airports and BA Airport go up and down completely randomly.
Pair Corralation between Airports and BA Airport
Assuming the 90 days trading horizon Airports of Thailand is expected to generate 174.61 times more return on investment than BA Airport. However, Airports is 174.61 times more volatile than BA Airport Leasehold. It trades about 0.11 of its potential returns per unit of risk. BA Airport Leasehold is currently generating about -0.07 per unit of risk. If you would invest 7,070 in Airports of Thailand on September 12, 2024 and sell it today you would lose (1,020) from holding Airports of Thailand or give up 14.43% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Airports of Thailand vs. BA Airport Leasehold
Performance |
| Timeline |
| Airports of Thailand |
| BA Airport Leasehold |
Airports and BA Airport Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Airports and BA Airport
The main advantage of trading using opposite Airports and BA Airport positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Airports position performs unexpectedly, BA Airport 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 BA Airport will offset losses from the drop in BA Airport's long position.| Airports vs. CP ALL Public | Airports vs. PTT Public | Airports vs. Bangkok Dusit Medical | Airports vs. The Siam Cement |
| BA Airport vs. Central Retail | BA Airport vs. Sahamit Machinery Public | BA Airport vs. The Navakij Insurance | BA Airport vs. Quality Construction Products |
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 AI Portfolio Architect module to use AI to generate optimal portfolios and find profitable investment opportunities.
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