Correlation Between Airports and President Bakery
Can any of the company-specific risk be diversified away by investing in both Airports and President Bakery 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 President Bakery 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 President Bakery Public, you can compare the effects of market volatilities on Airports and President Bakery 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 President Bakery. Check out your portfolio center. Please also check ongoing floating volatility patterns of Airports and President Bakery.
Diversification Opportunities for Airports and President Bakery
-0.26 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Airports and President is -0.26. Overlapping area represents the amount of risk that can be diversified away by holding Airports of Thailand and President Bakery Public in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on President Bakery 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 President Bakery. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of President Bakery Public has no effect on the direction of Airports i.e., Airports and President Bakery go up and down completely randomly.
Pair Corralation between Airports and President Bakery
Assuming the 90 days trading horizon Airports of Thailand is expected to generate 1.75 times more return on investment than President Bakery. However, Airports is 1.75 times more volatile than President Bakery Public. It trades about -0.03 of its potential returns per unit of risk. President Bakery Public is currently generating about -0.06 per unit of risk. If you would invest 6,918 in Airports of Thailand on September 12, 2024 and sell it today you would lose (868.00) from holding Airports of Thailand or give up 12.55% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Airports of Thailand vs. President Bakery Public
Performance |
| Timeline |
| Airports of Thailand |
| President Bakery Public |
Airports and President Bakery Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Airports and President Bakery
The main advantage of trading using opposite Airports and President Bakery positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Airports position performs unexpectedly, President Bakery 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 President Bakery will offset losses from the drop in President Bakery's long position.| Airports vs. CP ALL Public | Airports vs. PTT Public | Airports vs. Kasikornbank Public | Airports vs. Bangkok Dusit Medical |
| President Bakery vs. GFPT Public | President Bakery vs. Dynasty Ceramic Public | President Bakery vs. Haad Thip Public | President Bakery vs. The Erawan Group |
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 Pattern Recognition module to use different Pattern Recognition models to time the market across multiple global exchanges.
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