Correlation Between Airports and Pan Asia
Can any of the company-specific risk be diversified away by investing in both Airports and Pan Asia 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 Pan Asia 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 Pan Asia Footwear, you can compare the effects of market volatilities on Airports and Pan Asia 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 Pan Asia. Check out your portfolio center. Please also check ongoing floating volatility patterns of Airports and Pan Asia.
Diversification Opportunities for Airports and Pan Asia
Very weak diversification
The 3 months correlation between Airports and Pan is 0.44. Overlapping area represents the amount of risk that can be diversified away by holding Airports of Thailand and Pan Asia Footwear in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Pan Asia Footwear 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 Pan Asia. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Pan Asia Footwear has no effect on the direction of Airports i.e., Airports and Pan Asia go up and down completely randomly.
Pair Corralation between Airports and Pan Asia
Assuming the 90 days trading horizon Airports is expected to generate 165.85 times less return on investment than Pan Asia. But when comparing it to its historical volatility, Airports of Thailand is 54.69 times less risky than Pan Asia. It trades about 0.02 of its potential returns per unit of risk. Pan Asia Footwear is currently generating about 0.06 of returns per unit of risk over similar time horizon. If you would invest 107.00 in Pan Asia Footwear on September 4, 2024 and sell it today you would lose (8.00) from holding Pan Asia Footwear or give up 7.48% 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. Pan Asia Footwear
Performance |
| Timeline |
| Airports of Thailand |
| Pan Asia Footwear |
Airports and Pan Asia Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Airports and Pan Asia
The main advantage of trading using opposite Airports and Pan Asia positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Airports position performs unexpectedly, Pan Asia 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 Pan Asia will offset losses from the drop in Pan Asia's long position.| Airports vs. CP ALL Public | Airports vs. PTT Public | Airports vs. Kasikornbank Public | Airports vs. Bangkok Dusit Medical |
| Pan Asia vs. Central Pattana Public | Pan Asia vs. CP ALL Public | Pan Asia vs. Bangkok Dusit Medical | Pan Asia vs. Airports of Thailand |
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 Efficient Frontier module to plot and analyze your portfolio and positions against risk-return landscape of the market..
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