Correlation Between Airports and BGrimm Power
Can any of the company-specific risk be diversified away by investing in both Airports and BGrimm Power 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 BGrimm Power 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 BGrimm Power Public, you can compare the effects of market volatilities on Airports and BGrimm Power 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 BGrimm Power. Check out your portfolio center. Please also check ongoing floating volatility patterns of Airports and BGrimm Power.
Diversification Opportunities for Airports and BGrimm Power
0.87 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Airports and BGrimm is 0.87. Overlapping area represents the amount of risk that can be diversified away by holding Airports of Thailand and BGrimm Power Public in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on BGrimm Power 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 BGrimm Power. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of BGrimm Power Public has no effect on the direction of Airports i.e., Airports and BGrimm Power go up and down completely randomly.
Pair Corralation between Airports and BGrimm Power
Assuming the 90 days trading horizon Airports of Thailand is expected to generate 1.0 times more return on investment than BGrimm Power. However, Airports of Thailand is 1.0 times less risky than BGrimm Power. It trades about -0.03 of its potential returns per unit of risk. BGrimm Power Public is currently generating about -0.22 per unit of risk. If you would invest 6,175 in Airports of Thailand on August 29, 2024 and sell it today you would lose (50.00) from holding Airports of Thailand or give up 0.81% 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. BGrimm Power Public
Performance |
| Timeline |
| Airports of Thailand |
| BGrimm Power Public |
Airports and BGrimm Power Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Airports and BGrimm Power
The main advantage of trading using opposite Airports and BGrimm Power positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Airports position performs unexpectedly, BGrimm Power 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 BGrimm Power will offset losses from the drop in BGrimm Power's long position.| Airports vs. Tata Steel Public | Airports vs. Thaifoods Group Public | Airports vs. TMT Steel Public | Airports 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 Portfolio Suggestion module to get suggestions outside of your existing asset allocation including your own model portfolios.
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