Correlation Between Airports and Megachem Public
Can any of the company-specific risk be diversified away by investing in both Airports and Megachem Public 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 Megachem Public 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 Megachem Public, you can compare the effects of market volatilities on Airports and Megachem Public 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 Megachem Public. Check out your portfolio center. Please also check ongoing floating volatility patterns of Airports and Megachem Public.
Diversification Opportunities for Airports and Megachem Public
0.49 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Airports and Megachem is 0.49. Overlapping area represents the amount of risk that can be diversified away by holding Airports of Thailand and Megachem Public in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Megachem 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 Megachem Public. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Megachem Public has no effect on the direction of Airports i.e., Airports and Megachem Public go up and down completely randomly.
Pair Corralation between Airports and Megachem Public
Assuming the 90 days trading horizon Airports of Thailand is expected to under-perform the Megachem Public. But the stock apears to be less risky and, when comparing its historical volatility, Airports of Thailand is 45.4 times less risky than Megachem Public. The stock trades about -0.03 of its potential returns per unit of risk. The Megachem Public is currently generating about 0.05 of returns per unit of risk over similar time horizon. If you would invest 250.00 in Megachem Public on August 28, 2024 and sell it today you would lose (48.00) from holding Megachem Public or give up 19.2% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Airports of Thailand vs. Megachem Public
Performance |
| Timeline |
| Airports of Thailand |
| Megachem Public |
Airports and Megachem Public Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Airports and Megachem Public
The main advantage of trading using opposite Airports and Megachem Public positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Airports position performs unexpectedly, Megachem Public 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 Megachem Public will offset losses from the drop in Megachem Public's long position.| Airports vs. Tata Steel Public | Airports vs. Thaifoods Group Public | Airports vs. TMT Steel Public | Airports vs. The Erawan Group |
| Megachem Public vs. NCL International Logistics | Megachem Public vs. The Erawan Group | Megachem Public vs. Airports of Thailand | Megachem Public vs. Eastern Technical Engineering |
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 Comparator module to compare the composition, asset allocations and performance of any two portfolios in your account.
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