Correlation Between Airports and MFC Industrial
Can any of the company-specific risk be diversified away by investing in both Airports and MFC Industrial 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 MFC Industrial 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 MFC Industrial Investment, you can compare the effects of market volatilities on Airports and MFC Industrial 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 MFC Industrial. Check out your portfolio center. Please also check ongoing floating volatility patterns of Airports and MFC Industrial.
Diversification Opportunities for Airports and MFC Industrial
-0.01 | Correlation Coefficient |
Good diversification
The 3 months correlation between Airports and MFC is -0.01. Overlapping area represents the amount of risk that can be diversified away by holding Airports of Thailand and MFC Industrial Investment in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on MFC Industrial Investment 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 MFC Industrial. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of MFC Industrial Investment has no effect on the direction of Airports i.e., Airports and MFC Industrial go up and down completely randomly.
Pair Corralation between Airports and MFC Industrial
Assuming the 90 days trading horizon Airports of Thailand is expected to generate 84.09 times more return on investment than MFC Industrial. However, Airports is 84.09 times more volatile than MFC Industrial Investment. It trades about 0.09 of its potential returns per unit of risk. MFC Industrial Investment is currently generating about 0.02 per unit of risk. If you would invest 7,070 in Airports of Thailand on August 25, 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 Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Airports of Thailand vs. MFC Industrial Investment
Performance |
| Timeline |
| Airports of Thailand |
| MFC Industrial Investment |
Airports and MFC Industrial Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Airports and MFC Industrial
The main advantage of trading using opposite Airports and MFC Industrial positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Airports position performs unexpectedly, MFC Industrial 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 MFC Industrial will offset losses from the drop in MFC Industrial's long position.| Airports vs. CP ALL Public | Airports vs. PTT Public | Airports vs. Bangkok Dusit Medical | Airports vs. The Siam Cement |
| MFC Industrial vs. Delta Electronics Public | MFC Industrial vs. Delta Electronics Public | MFC Industrial vs. Airports of Thailand | MFC Industrial 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 Bollinger Bands module to use Bollinger Bands indicator to analyze target price for a given investing horizon.
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