Correlation Between Airports and CI Group
Can any of the company-specific risk be diversified away by investing in both Airports and CI 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 CI 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 CI Group Public, you can compare the effects of market volatilities on Airports and CI 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 CI Group. Check out your portfolio center. Please also check ongoing floating volatility patterns of Airports and CI Group.
Diversification Opportunities for Airports and CI Group
Modest diversification
The 3 months correlation between Airports and CIG is 0.28. Overlapping area represents the amount of risk that can be diversified away by holding Airports of Thailand and CI Group Public in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on CI Group 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 CI Group. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of CI Group Public has no effect on the direction of Airports i.e., Airports and CI Group go up and down completely randomly.
Pair Corralation between Airports and CI Group
Assuming the 90 days trading horizon Airports of Thailand is expected to under-perform the CI Group. But the stock apears to be less risky and, when comparing its historical volatility, Airports of Thailand is 11.0 times less risky than CI Group. The stock trades about -0.02 of its potential returns per unit of risk. The CI Group Public is currently generating about 0.14 of returns per unit of risk over similar time horizon. If you would invest 4.00 in CI Group Public on August 29, 2024 and sell it today you would earn a total of 1.00 from holding CI Group Public or generate 25.0% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Airports of Thailand vs. CI Group Public
Performance |
| Timeline |
| Airports of Thailand |
| CI Group Public |
Airports and CI Group Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Airports and CI Group
The main advantage of trading using opposite Airports and CI Group positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Airports position performs unexpectedly, CI 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 CI Group will offset losses from the drop in CI Group's long position.| Airports vs. CP ALL Public | Airports vs. PTT Public | Airports vs. Kasikornbank Public | Airports vs. Bangkok Dusit Medical |
| CI Group vs. ASIA Capital Group | CI Group vs. Cho Thavee Public | CI Group vs. CMO Public | CI Group vs. CPR Gomu Industrial |
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 Diagnostics module to use generated alerts and portfolio events aggregator to diagnose current holdings.
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