Correlation Between Airports and Bangkok Aviation
Can any of the company-specific risk be diversified away by investing in both Airports and Bangkok Aviation 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 Bangkok Aviation 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 Bangkok Aviation Fuel, you can compare the effects of market volatilities on Airports and Bangkok Aviation 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 Bangkok Aviation. Check out your portfolio center. Please also check ongoing floating volatility patterns of Airports and Bangkok Aviation.
Diversification Opportunities for Airports and Bangkok Aviation
0.8 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Airports and Bangkok is 0.8. Overlapping area represents the amount of risk that can be diversified away by holding Airports of Thailand and Bangkok Aviation Fuel in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Bangkok Aviation Fuel 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 Bangkok Aviation. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Bangkok Aviation Fuel has no effect on the direction of Airports i.e., Airports and Bangkok Aviation go up and down completely randomly.
Pair Corralation between Airports and Bangkok Aviation
Assuming the 90 days trading horizon Airports of Thailand is expected to generate 0.64 times more return on investment than Bangkok Aviation. However, Airports of Thailand is 1.56 times less risky than Bangkok Aviation. It trades about -0.03 of its potential returns per unit of risk. Bangkok Aviation Fuel is currently generating about -0.09 per unit of risk. If you would invest 7,356 in Airports of Thailand on August 29, 2024 and sell it today you would lose (1,231) from holding Airports of Thailand or give up 16.73% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Airports of Thailand vs. Bangkok Aviation Fuel
Performance |
| Timeline |
| Airports of Thailand |
| Bangkok Aviation Fuel |
Airports and Bangkok Aviation Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Airports and Bangkok Aviation
The main advantage of trading using opposite Airports and Bangkok Aviation positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Airports position performs unexpectedly, Bangkok Aviation 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 Bangkok Aviation will offset losses from the drop in Bangkok Aviation's long position.| Airports vs. Tata Steel Public | Airports vs. Thaifoods Group Public | Airports vs. TMT Steel Public | Airports vs. The Erawan Group |
| Bangkok Aviation vs. Tata Steel Public | Bangkok Aviation vs. Thaifoods Group Public | Bangkok Aviation vs. TMT Steel Public | Bangkok Aviation vs. The Erawan Group |
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 Investing Opportunities module to build portfolios using our predefined set of ideas and optimize them against your investing preferences.
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