Correlation Between Airports and ONE Enterprise
Can any of the company-specific risk be diversified away by investing in both Airports and ONE Enterprise 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 ONE Enterprise 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 The ONE Enterprise, you can compare the effects of market volatilities on Airports and ONE Enterprise 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 ONE Enterprise. Check out your portfolio center. Please also check ongoing floating volatility patterns of Airports and ONE Enterprise.
Diversification Opportunities for Airports and ONE Enterprise
0.53 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Airports and ONE is 0.53. Overlapping area represents the amount of risk that can be diversified away by holding Airports of Thailand and The ONE Enterprise in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ONE Enterprise 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 ONE Enterprise. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ONE Enterprise has no effect on the direction of Airports i.e., Airports and ONE Enterprise go up and down completely randomly.
Pair Corralation between Airports and ONE Enterprise
Assuming the 90 days trading horizon Airports of Thailand is expected to generate 0.46 times more return on investment than ONE Enterprise. However, Airports of Thailand is 2.19 times less risky than ONE Enterprise. It trades about -0.03 of its potential returns per unit of risk. The ONE Enterprise is currently generating about -0.05 per unit of risk. If you would invest 7,380 in Airports of Thailand on August 24, 2024 and sell it today you would lose (1,255) from holding Airports of Thailand or give up 17.01% 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. The ONE Enterprise
Performance |
| Timeline |
| Airports of Thailand |
| ONE Enterprise |
Airports and ONE Enterprise Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Airports and ONE Enterprise
The main advantage of trading using opposite Airports and ONE Enterprise positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Airports position performs unexpectedly, ONE Enterprise 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 ONE Enterprise will offset losses from the drop in ONE Enterprise's long position.| Airports vs. CP ALL Public | Airports vs. PTT Public | Airports vs. Kasikornbank Public | Airports vs. Bangkok Dusit Medical |
| ONE Enterprise vs. Major Cineplex Group | ONE Enterprise vs. Yggdrazil Group Public | ONE Enterprise vs. More Return 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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