Correlation Between Airports and Namyong Terminal
Can any of the company-specific risk be diversified away by investing in both Airports and Namyong Terminal 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 Namyong Terminal 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 Namyong Terminal PCL, you can compare the effects of market volatilities on Airports and Namyong Terminal 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 Namyong Terminal. Check out your portfolio center. Please also check ongoing floating volatility patterns of Airports and Namyong Terminal.
Diversification Opportunities for Airports and Namyong Terminal
0.65 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Airports and Namyong is 0.65. Overlapping area represents the amount of risk that can be diversified away by holding Airports of Thailand and Namyong Terminal PCL in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Namyong Terminal 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 Namyong Terminal. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Namyong Terminal PCL has no effect on the direction of Airports i.e., Airports and Namyong Terminal go up and down completely randomly.
Pair Corralation between Airports and Namyong Terminal
Assuming the 90 days trading horizon Airports of Thailand is expected to generate 0.72 times more return on investment than Namyong Terminal. However, Airports of Thailand is 1.39 times less risky than Namyong Terminal. It trades about 0.01 of its potential returns per unit of risk. Namyong Terminal PCL is currently generating about -0.06 per unit of risk. If you would invest 5,998 in Airports of Thailand on September 12, 2024 and sell it today you would earn a total of 52.00 from holding Airports of Thailand or generate 0.87% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Airports of Thailand vs. Namyong Terminal PCL
Performance |
| Timeline |
| Airports of Thailand |
| Namyong Terminal PCL |
Airports and Namyong Terminal Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Airports and Namyong Terminal
The main advantage of trading using opposite Airports and Namyong Terminal positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Airports position performs unexpectedly, Namyong Terminal 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 Namyong Terminal will offset losses from the drop in Namyong Terminal's long position.| Airports vs. CP ALL Public | Airports vs. PTT Public | Airports vs. Kasikornbank Public | Airports vs. Bangkok Dusit Medical |
| Namyong Terminal vs. Tata Steel Public | Namyong Terminal vs. TTCL Public | Namyong Terminal vs. Thaifoods Group Public | Namyong Terminal vs. TMT Steel 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 Portfolio Backtesting module to avoid under-diversification and over-optimization by backtesting your portfolios.
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