Correlation Between Airports and Dexon Technology
Can any of the company-specific risk be diversified away by investing in both Airports and Dexon Technology 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 Dexon Technology 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 Dexon Technology PCL, you can compare the effects of market volatilities on Airports and Dexon Technology 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 Dexon Technology. Check out your portfolio center. Please also check ongoing floating volatility patterns of Airports and Dexon Technology.
Diversification Opportunities for Airports and Dexon Technology
0.62 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Airports and Dexon is 0.62. Overlapping area represents the amount of risk that can be diversified away by holding Airports of Thailand and Dexon Technology PCL in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Dexon Technology PCL 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 Dexon Technology. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Dexon Technology PCL has no effect on the direction of Airports i.e., Airports and Dexon Technology go up and down completely randomly.
Pair Corralation between Airports and Dexon Technology
Assuming the 90 days trading horizon Airports of Thailand is expected to under-perform the Dexon Technology. But the stock apears to be less risky and, when comparing its historical volatility, Airports of Thailand is 45.24 times less risky than Dexon Technology. The stock trades about -0.03 of its potential returns per unit of risk. The Dexon Technology PCL is currently generating about 0.04 of returns per unit of risk over similar time horizon. If you would invest 367.00 in Dexon Technology PCL on September 11, 2024 and sell it today you would lose (210.00) from holding Dexon Technology PCL or give up 57.22% 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. Dexon Technology PCL
Performance |
| Timeline |
| Airports of Thailand |
| Dexon Technology PCL |
Airports and Dexon Technology Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Airports and Dexon Technology
The main advantage of trading using opposite Airports and Dexon Technology positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Airports position performs unexpectedly, Dexon Technology 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 Dexon Technology will offset losses from the drop in Dexon Technology's long position.| Airports vs. CP ALL Public | Airports vs. PTT Public | Airports vs. Kasikornbank Public | Airports vs. Bangkok Dusit Medical |
| Dexon Technology vs. LH Financial Group | Dexon Technology vs. Bank of Ayudhya | Dexon Technology vs. Hana Microelectronics Public | Dexon Technology vs. Interlink Communication Public |
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 Idea Optimizer module to use advanced portfolio builder with pre-computed micro ideas to build optimal portfolio .
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