Correlation Between Airports and SC Asset
Can any of the company-specific risk be diversified away by investing in both Airports and SC Asset 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 SC Asset 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 SC Asset, you can compare the effects of market volatilities on Airports and SC Asset 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 SC Asset. Check out your portfolio center. Please also check ongoing floating volatility patterns of Airports and SC Asset.
Diversification Opportunities for Airports and SC Asset
Poor diversification
The 3 months correlation between Airports and SC Asset is 0.63. Overlapping area represents the amount of risk that can be diversified away by holding Airports of Thailand and SC Asset in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SC Asset 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 SC Asset. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of SC Asset has no effect on the direction of Airports i.e., Airports and SC Asset go up and down completely randomly.
Pair Corralation between Airports and SC Asset
Assuming the 90 days trading horizon Airports of Thailand is expected to under-perform the SC Asset. In addition to that, Airports is 3.34 times more volatile than SC Asset. It trades about -0.17 of its total potential returns per unit of risk. SC Asset is currently generating about 0.0 per unit of volatility. If you would invest 296.00 in SC Asset on August 29, 2024 and sell it today you would earn a total of 0.00 from holding SC Asset or generate 0.0% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Airports of Thailand vs. SC Asset
Performance |
| Timeline |
| Airports of Thailand |
| SC Asset |
Airports and SC Asset Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Airports and SC Asset
The main advantage of trading using opposite Airports and SC Asset positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Airports position performs unexpectedly, SC Asset 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 SC Asset will offset losses from the drop in SC Asset's long position.| Airports vs. CP ALL Public | Airports vs. PTT Public | Airports vs. Bangkok Dusit Medical | Airports vs. The Siam Cement |
| SC Asset vs. Eastern Star Real | SC Asset vs. Bangkok Land Public | SC Asset vs. Ananda Development Public | SC Asset vs. Better World Green |
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 Performance Analysis module to check effects of mean-variance optimization against your current asset allocation.
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