Correlation Between Airports and Alpha Divisions
Can any of the company-specific risk be diversified away by investing in both Airports and Alpha Divisions 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 Alpha Divisions 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 Alpha Divisions PCL, you can compare the effects of market volatilities on Airports and Alpha Divisions 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 Alpha Divisions. Check out your portfolio center. Please also check ongoing floating volatility patterns of Airports and Alpha Divisions.
Diversification Opportunities for Airports and Alpha Divisions
0.47 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Airports and Alpha is 0.47. Overlapping area represents the amount of risk that can be diversified away by holding Airports of Thailand and Alpha Divisions PCL in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Alpha Divisions PCL 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 Alpha Divisions. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Alpha Divisions PCL has no effect on the direction of Airports i.e., Airports and Alpha Divisions go up and down completely randomly.
Pair Corralation between Airports and Alpha Divisions
Assuming the 90 days trading horizon Airports of Thailand is expected to under-perform the Alpha Divisions. But the stock apears to be less risky and, when comparing its historical volatility, Airports of Thailand is 41.24 times less risky than Alpha Divisions. The stock trades about -0.03 of its potential returns per unit of risk. The Alpha Divisions PCL is currently generating about 0.04 of returns per unit of risk over similar time horizon. If you would invest 83.00 in Alpha Divisions PCL on September 12, 2024 and sell it today you would lose (22.00) from holding Alpha Divisions PCL or give up 26.51% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Airports of Thailand vs. Alpha Divisions PCL
Performance |
| Timeline |
| Airports of Thailand |
| Alpha Divisions PCL |
Airports and Alpha Divisions Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Airports and Alpha Divisions
The main advantage of trading using opposite Airports and Alpha Divisions positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Airports position performs unexpectedly, Alpha Divisions 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 Alpha Divisions will offset losses from the drop in Alpha Divisions' long position.| Airports vs. CP ALL Public | Airports vs. PTT Public | Airports vs. Kasikornbank Public | Airports vs. Bangkok Dusit Medical |
| Alpha Divisions vs. Property Perfect Public | Alpha Divisions vs. The Erawan Group | Alpha Divisions vs. Jay Mart Public | Alpha Divisions 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 Competition Analyzer module to analyze and compare many basic indicators for a group of related or unrelated entities.
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