Correlation Between Airports and Home Product
Can any of the company-specific risk be diversified away by investing in both Airports and Home Product 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 Home Product 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 Home Product Center, you can compare the effects of market volatilities on Airports and Home Product 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 Home Product. Check out your portfolio center. Please also check ongoing floating volatility patterns of Airports and Home Product.
Diversification Opportunities for Airports and Home Product
0.36 | Correlation Coefficient |
Weak diversification
The 3 months correlation between Airports and Home is 0.36. Overlapping area represents the amount of risk that can be diversified away by holding Airports of Thailand and Home Product Center in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Home Product Center 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 Home Product. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Home Product Center has no effect on the direction of Airports i.e., Airports and Home Product go up and down completely randomly.
Pair Corralation between Airports and Home Product
Assuming the 90 days trading horizon Airports of Thailand is expected to under-perform the Home Product. In addition to that, Airports is 1.38 times more volatile than Home Product Center. It trades about -0.36 of its total potential returns per unit of risk. Home Product Center is currently generating about -0.08 per unit of volatility. If you would invest 895.00 in Home Product Center on November 27, 2024 and sell it today you would lose (45.00) from holding Home Product Center or give up 5.03% 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. Home Product Center
Performance |
| Timeline |
| Airports of Thailand |
| Home Product Center |
Airports and Home Product Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Airports and Home Product
The main advantage of trading using opposite Airports and Home Product positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Airports position performs unexpectedly, Home Product 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 Home Product will offset losses from the drop in Home Product's long position.| Airports vs. CP ALL Public | Airports vs. PTT Public | Airports vs. Kasikornbank Public | Airports vs. Bangkok Dusit Medical |
| Home Product vs. CP ALL Public | Home Product vs. Bangkok Dusit Medical | Home Product vs. Central Pattana Public | Home Product vs. Advanced Info Service |
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 Stocks Directory module to find actively traded stocks across global markets.
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