Correlation Between Airports and Chonburi Concrete
Can any of the company-specific risk be diversified away by investing in both Airports and Chonburi Concrete 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 Chonburi Concrete 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 Chonburi Concrete Product, you can compare the effects of market volatilities on Airports and Chonburi Concrete 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 Chonburi Concrete. Check out your portfolio center. Please also check ongoing floating volatility patterns of Airports and Chonburi Concrete.
Diversification Opportunities for Airports and Chonburi Concrete
0.71 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Airports and Chonburi is 0.71. Overlapping area represents the amount of risk that can be diversified away by holding Airports of Thailand and Chonburi Concrete Product in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Chonburi Concrete Product 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 Chonburi Concrete. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Chonburi Concrete Product has no effect on the direction of Airports i.e., Airports and Chonburi Concrete go up and down completely randomly.
Pair Corralation between Airports and Chonburi Concrete
Assuming the 90 days trading horizon Airports of Thailand is expected to under-perform the Chonburi Concrete. But the stock apears to be less risky and, when comparing its historical volatility, Airports of Thailand is 41.11 times less risky than Chonburi Concrete. The stock trades about -0.02 of its potential returns per unit of risk. The Chonburi Concrete Product is currently generating about 0.04 of returns per unit of risk over similar time horizon. If you would invest 38.00 in Chonburi Concrete Product on September 13, 2024 and sell it today you would lose (9.00) from holding Chonburi Concrete Product or give up 23.68% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Airports of Thailand vs. Chonburi Concrete Product
Performance |
| Timeline |
| Airports of Thailand |
| Chonburi Concrete Product |
Airports and Chonburi Concrete Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Airports and Chonburi Concrete
The main advantage of trading using opposite Airports and Chonburi Concrete positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Airports position performs unexpectedly, Chonburi Concrete 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 Chonburi Concrete will offset losses from the drop in Chonburi Concrete's long position.| Airports vs. CP ALL Public | Airports vs. PTT Public | Airports vs. Kasikornbank Public | Airports vs. Bangkok Dusit Medical |
| Chonburi Concrete vs. Thantawan Industry Public | Chonburi Concrete vs. The Erawan Group | Chonburi Concrete vs. Jay Mart Public | Chonburi Concrete 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 Rebalancing module to analyze risk-adjusted returns against different time horizons to find asset-allocation targets.
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