Correlation Between Airports and BTS Group
Can any of the company-specific risk be diversified away by investing in both Airports and BTS Group 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 BTS Group 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 BTS Group Holdings, you can compare the effects of market volatilities on Airports and BTS Group 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 BTS Group. Check out your portfolio center. Please also check ongoing floating volatility patterns of Airports and BTS Group.
Diversification Opportunities for Airports and BTS Group
Good diversification
The 3 months correlation between Airports and BTS is -0.12. Overlapping area represents the amount of risk that can be diversified away by holding Airports of Thailand and BTS Group Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on BTS Group Holdings 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 BTS Group. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of BTS Group Holdings has no effect on the direction of Airports i.e., Airports and BTS Group go up and down completely randomly.
Pair Corralation between Airports and BTS Group
Assuming the 90 days trading horizon Airports of Thailand is expected to under-perform the BTS Group. But the stock apears to be less risky and, when comparing its historical volatility, Airports of Thailand is 1.4 times less risky than BTS Group. The stock trades about -0.02 of its potential returns per unit of risk. The BTS Group Holdings is currently generating about 0.22 of returns per unit of risk over similar time horizon. If you would invest 490.00 in BTS Group Holdings on August 29, 2024 and sell it today you would earn a total of 40.00 from holding BTS Group Holdings or generate 8.16% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Airports of Thailand vs. BTS Group Holdings
Performance |
| Timeline |
| Airports of Thailand |
| BTS Group Holdings |
Airports and BTS Group Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Airports and BTS Group
The main advantage of trading using opposite Airports and BTS Group positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Airports position performs unexpectedly, BTS Group 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 BTS Group will offset losses from the drop in BTS Group's long position.| Airports vs. CP ALL Public | Airports vs. PTT Public | Airports vs. Kasikornbank Public | Airports vs. Bangkok Dusit Medical |
| BTS Group vs. Bangkok Expressway and | BTS Group vs. CP ALL Public | BTS Group vs. Airports of Thailand | BTS Group vs. Bangkok Dusit Medical |
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 Efficient Frontier module to plot and analyze your portfolio and positions against risk-return landscape of the market..
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