Correlation Between Airports and Centara Hotels
Can any of the company-specific risk be diversified away by investing in both Airports and Centara Hotels 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 Centara Hotels 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 Centara Hotels Resorts, you can compare the effects of market volatilities on Airports and Centara Hotels 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 Centara Hotels. Check out your portfolio center. Please also check ongoing floating volatility patterns of Airports and Centara Hotels.
Diversification Opportunities for Airports and Centara Hotels
0.02 | Correlation Coefficient |
Significant diversification
The 3 months correlation between Airports and Centara is 0.02. Overlapping area represents the amount of risk that can be diversified away by holding Airports of Thailand and Centara Hotels Resorts in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Centara Hotels Resorts 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 Centara Hotels. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Centara Hotels Resorts has no effect on the direction of Airports i.e., Airports and Centara Hotels go up and down completely randomly.
Pair Corralation between Airports and Centara Hotels
Assuming the 90 days trading horizon Airports is expected to generate 2170.65 times less return on investment than Centara Hotels. But when comparing it to its historical volatility, Airports of Thailand is 143.46 times less risky than Centara Hotels. It trades about 0.01 of its potential returns per unit of risk. Centara Hotels Resorts is currently generating about 0.15 of returns per unit of risk over similar time horizon. If you would invest 436.00 in Centara Hotels Resorts on September 3, 2024 and sell it today you would earn a total of 22.00 from holding Centara Hotels Resorts or generate 5.05% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Airports of Thailand vs. Centara Hotels Resorts
Performance |
| Timeline |
| Airports of Thailand |
| Centara Hotels Resorts |
Airports and Centara Hotels Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Airports and Centara Hotels
The main advantage of trading using opposite Airports and Centara Hotels positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Airports position performs unexpectedly, Centara Hotels 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 Centara Hotels will offset losses from the drop in Centara Hotels' long position.| Airports vs. CP ALL Public | Airports vs. PTT Public | Airports vs. Kasikornbank Public | Airports vs. Bangkok Dusit Medical |
| Centara Hotels vs. Delta Electronics Public | Centara Hotels vs. Delta Electronics Public | Centara Hotels vs. Airports of Thailand | Centara Hotels 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 Dashboard module to portfolio dashboard that provides centralized access to all your investments.
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