Correlation Between Airports and Bound
Can any of the company-specific risk be diversified away by investing in both Airports and Bound 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 Bound 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 Bound and Beyond, you can compare the effects of market volatilities on Airports and Bound 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 Bound. Check out your portfolio center. Please also check ongoing floating volatility patterns of Airports and Bound.
Diversification Opportunities for Airports and Bound
Significant diversification
The 3 months correlation between Airports and Bound is 0.09. Overlapping area represents the amount of risk that can be diversified away by holding Airports of Thailand and Bound and Beyond in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Bound and Beyond 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 Bound. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Bound and Beyond has no effect on the direction of Airports i.e., Airports and Bound go up and down completely randomly.
Pair Corralation between Airports and Bound
Assuming the 90 days trading horizon Airports of Thailand is expected to generate 50.8 times more return on investment than Bound. However, Airports is 50.8 times more volatile than Bound and Beyond. It trades about 0.08 of its potential returns per unit of risk. Bound and Beyond is currently generating about -0.06 per unit of risk. If you would invest 7,070 in Airports of Thailand on September 15, 2024 and sell it today you would lose (945.00) from holding Airports of Thailand or give up 13.37% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 99.23% |
| Values | Daily Returns |
Airports of Thailand vs. Bound and Beyond
Performance |
| Timeline |
| Airports of Thailand |
| Bound and Beyond |
Airports and Bound Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Airports and Bound
The main advantage of trading using opposite Airports and Bound positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Airports position performs unexpectedly, Bound 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 Bound will offset losses from the drop in Bound's long position.| Airports vs. CP ALL Public | Airports vs. PTT Public | Airports vs. Bangkok Dusit Medical | Airports vs. The Siam Cement |
| Bound vs. Delta Electronics Public | Bound vs. Delta Electronics Public | Bound vs. Airports of Thailand | Bound vs. Airports of Thailand |
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 Transaction History module to view history of all your transactions and understand their impact on performance.
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