Correlation Between Airports and Jay Mart

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Can any of the company-specific risk be diversified away by investing in both Airports and Jay Mart 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 Jay Mart 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 Jay Mart Public, you can compare the effects of market volatilities on Airports and Jay Mart 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 Jay Mart. Check out your portfolio center. Please also check ongoing floating volatility patterns of Airports and Jay Mart.

Diversification Opportunities for Airports and Jay Mart

0.97
  Correlation Coefficient

Almost no diversification

The 3 months correlation between Airports and Jay is 0.97. Overlapping area represents the amount of risk that can be diversified away by holding Airports of Thailand and Jay Mart Public in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Jay Mart Public 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 Jay Mart. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Jay Mart Public has no effect on the direction of Airports i.e., Airports and Jay Mart go up and down completely randomly.

Pair Corralation between Airports and Jay Mart

Assuming the 90 days trading horizon Airports of Thailand is expected to generate 1.0 times more return on investment than Jay Mart. However, Airports is 1.0 times more volatile than Jay Mart Public. It trades about 0.06 of its potential returns per unit of risk. Jay Mart Public is currently generating about 0.05 per unit of risk. If you would invest  7,388  in Airports of Thailand on September 2, 2024 and sell it today you would lose (1,313) from holding Airports of Thailand or give up 17.77% of portfolio value over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthVery Strong
Accuracy99.79%
ValuesDaily Returns

Airports of Thailand  vs.  Jay Mart Public

 Performance 
       Timeline  
Airports of Thailand 

Risk-Adjusted Performance

12 of 100

 
Weak
 
Strong
Good
Compared to the overall equity markets, risk-adjusted returns on investments in Airports of Thailand are ranked lower than 12 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak fundamental drivers, Airports sustained solid returns over the last few months and may actually be approaching a breakup point.
Jay Mart Public 

Risk-Adjusted Performance

12 of 100

 
Weak
 
Strong
Good
Compared to the overall equity markets, risk-adjusted returns on investments in Jay Mart Public are ranked lower than 12 (%) of all global equities and portfolios over the last 90 days. Even with relatively conflicting basic indicators, Jay Mart reported solid returns over the last few months and may actually be approaching a breakup point.

Airports and Jay Mart Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Airports and Jay Mart

The main advantage of trading using opposite Airports and Jay Mart positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Airports position performs unexpectedly, Jay Mart 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 Jay Mart will offset losses from the drop in Jay Mart's long position.
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The idea behind Airports of Thailand and Jay Mart Public 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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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 Portfolio Suggestion module to get suggestions outside of your existing asset allocation including your own model portfolios.

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