Correlation Between Airports and General Environmental
Can any of the company-specific risk be diversified away by investing in both Airports and General Environmental 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 General Environmental 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 General Environmental Conservation, you can compare the effects of market volatilities on Airports and General Environmental 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 General Environmental. Check out your portfolio center. Please also check ongoing floating volatility patterns of Airports and General Environmental.
Diversification Opportunities for Airports and General Environmental
0.33 | Correlation Coefficient |
Weak diversification
The 3 months correlation between Airports and General is 0.33. Overlapping area represents the amount of risk that can be diversified away by holding Airports of Thailand and General Environmental Conserva in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on General Environmental 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 General Environmental. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of General Environmental has no effect on the direction of Airports i.e., Airports and General Environmental go up and down completely randomly.
Pair Corralation between Airports and General Environmental
Assuming the 90 days trading horizon Airports of Thailand is expected to generate 0.63 times more return on investment than General Environmental. However, Airports of Thailand is 1.58 times less risky than General Environmental. It trades about -0.01 of its potential returns per unit of risk. General Environmental Conservation is currently generating about -0.09 per unit of risk. If you would invest 6,225 in Airports of Thailand on September 5, 2024 and sell it today you would lose (25.00) from holding Airports of Thailand or give up 0.4% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Airports of Thailand vs. General Environmental Conserva
Performance |
| Timeline |
| Airports of Thailand |
| General Environmental |
Airports and General Environmental Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Airports and General Environmental
The main advantage of trading using opposite Airports and General Environmental positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Airports position performs unexpectedly, General Environmental 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 General Environmental will offset losses from the drop in General Environmental's long position.| Airports vs. CP ALL Public | Airports vs. PTT Public | Airports vs. Kasikornbank Public | Airports vs. Bangkok Dusit Medical |
| General Environmental vs. Asia Aviation Public | General Environmental vs. Bangkok Dusit Medical | General Environmental vs. Bangkok Expressway and | General Environmental 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 Global Correlations module to find global opportunities by holding instruments from different markets.
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