Correlation Between Airports and Eureka Design
Can any of the company-specific risk be diversified away by investing in both Airports and Eureka Design 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 Eureka Design 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 Eureka Design Public, you can compare the effects of market volatilities on Airports and Eureka Design 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 Eureka Design. Check out your portfolio center. Please also check ongoing floating volatility patterns of Airports and Eureka Design.
Diversification Opportunities for Airports and Eureka Design
0.07 | Correlation Coefficient |
Significant diversification
The 3 months correlation between Airports and Eureka is 0.07. Overlapping area represents the amount of risk that can be diversified away by holding Airports of Thailand and Eureka Design Public in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Eureka Design 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 Eureka Design. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Eureka Design Public has no effect on the direction of Airports i.e., Airports and Eureka Design go up and down completely randomly.
Pair Corralation between Airports and Eureka Design
Assuming the 90 days trading horizon Airports of Thailand is expected to generate 19.33 times more return on investment than Eureka Design. However, Airports is 19.33 times more volatile than Eureka Design Public. It trades about 0.06 of its potential returns per unit of risk. Eureka Design Public is currently generating about -0.04 per unit of risk. If you would invest 7,432 in Airports of Thailand on August 26, 2024 and sell it today you would lose (1,307) from holding Airports of Thailand or give up 17.59% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 99.79% |
| Values | Daily Returns |
Airports of Thailand vs. Eureka Design Public
Performance |
| Timeline |
| Airports of Thailand |
| Eureka Design Public |
Airports and Eureka Design Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Airports and Eureka Design
The main advantage of trading using opposite Airports and Eureka Design positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Airports position performs unexpectedly, Eureka Design 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 Eureka Design will offset losses from the drop in Eureka Design's long position.| Airports vs. CP ALL Public | Airports vs. PTT Public | Airports vs. Bangkok Dusit Medical | Airports vs. The Siam Cement |
| Eureka Design vs. Delta Electronics Public | Eureka Design vs. Delta Electronics Public | Eureka Design vs. Airports of Thailand | Eureka Design 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 Portfolio File Import module to quickly import all of your third-party portfolios from your local drive in csv format.
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