Correlation Between Airports and Peace Living
Can any of the company-specific risk be diversified away by investing in both Airports and Peace Living 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 Peace Living 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 Peace Living PCL, you can compare the effects of market volatilities on Airports and Peace Living 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 Peace Living. Check out your portfolio center. Please also check ongoing floating volatility patterns of Airports and Peace Living.
Diversification Opportunities for Airports and Peace Living
0.62 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Airports and Peace is 0.62. Overlapping area represents the amount of risk that can be diversified away by holding Airports of Thailand and Peace Living PCL in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Peace Living 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 Peace Living. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Peace Living PCL has no effect on the direction of Airports i.e., Airports and Peace Living go up and down completely randomly.
Pair Corralation between Airports and Peace Living
Assuming the 90 days trading horizon Airports of Thailand is expected to generate 0.69 times more return on investment than Peace Living. However, Airports of Thailand is 1.45 times less risky than Peace Living. It trades about -0.03 of its potential returns per unit of risk. Peace Living PCL 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 Together |
| Strength | Significant |
| Accuracy | 99.71% |
| Values | Daily Returns |
Airports of Thailand vs. Peace Living PCL
Performance |
| Timeline |
| Airports of Thailand |
| Peace Living PCL |
Airports and Peace Living Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Airports and Peace Living
The main advantage of trading using opposite Airports and Peace Living positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Airports position performs unexpectedly, Peace Living 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 Peace Living will offset losses from the drop in Peace Living's long position.| Airports vs. CP ALL Public | Airports vs. PTT Public | Airports vs. Kasikornbank Public | Airports vs. Bangkok Dusit Medical |
| Peace Living vs. Delta Electronics Public | Peace Living vs. Delta Electronics Public | Peace Living vs. Airports of Thailand | Peace Living 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 Alpha Finder module to use alpha and beta coefficients to find investment opportunities after accounting for the risk.
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