Correlation Between Airports and Lam Soon
Can any of the company-specific risk be diversified away by investing in both Airports and Lam Soon 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 Lam Soon 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 Lam Soon Public, you can compare the effects of market volatilities on Airports and Lam Soon 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 Lam Soon. Check out your portfolio center. Please also check ongoing floating volatility patterns of Airports and Lam Soon.
Diversification Opportunities for Airports and Lam Soon
Significant diversification
The 3 months correlation between Airports and Lam is 0.08. Overlapping area represents the amount of risk that can be diversified away by holding Airports of Thailand and Lam Soon Public in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Lam Soon 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 Lam Soon. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Lam Soon Public has no effect on the direction of Airports i.e., Airports and Lam Soon go up and down completely randomly.
Pair Corralation between Airports and Lam Soon
Assuming the 90 days trading horizon Airports is expected to generate 800.33 times less return on investment than Lam Soon. But when comparing it to its historical volatility, Airports of Thailand is 83.05 times less risky than Lam Soon. It trades about 0.01 of its potential returns per unit of risk. Lam Soon Public is currently generating about 0.08 of returns per unit of risk over similar time horizon. If you would invest 486.00 in Lam Soon Public on September 4, 2024 and sell it today you would earn a total of 14.00 from holding Lam Soon Public or generate 2.88% 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. Lam Soon Public
Performance |
| Timeline |
| Airports of Thailand |
| Lam Soon Public |
Airports and Lam Soon Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Airports and Lam Soon
The main advantage of trading using opposite Airports and Lam Soon positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Airports position performs unexpectedly, Lam Soon 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 Lam Soon will offset losses from the drop in Lam Soon's long position.| Airports vs. CP ALL Public | Airports vs. PTT Public | Airports vs. Kasikornbank Public | Airports vs. Bangkok Dusit Medical |
| Lam Soon vs. Airports of Thailand | Lam Soon vs. PTT Public | Lam Soon vs. Bangkok Dusit Medical | Lam Soon vs. Kasikornbank 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 Transaction History module to view history of all your transactions and understand their impact on performance.
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