Correlation Between Airports and Power Line
Can any of the company-specific risk be diversified away by investing in both Airports and Power Line 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 Power Line 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 Power Line Engineering, you can compare the effects of market volatilities on Airports and Power Line 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 Power Line. Check out your portfolio center. Please also check ongoing floating volatility patterns of Airports and Power Line.
Diversification Opportunities for Airports and Power Line
0.41 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Airports and Power is 0.41. Overlapping area represents the amount of risk that can be diversified away by holding Airports of Thailand and Power Line Engineering in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Power Line Engineering 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 Power Line. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Power Line Engineering has no effect on the direction of Airports i.e., Airports and Power Line go up and down completely randomly.
Pair Corralation between Airports and Power Line
Assuming the 90 days trading horizon Airports of Thailand is expected to generate 0.88 times more return on investment than Power Line. However, Airports of Thailand is 1.14 times less risky than Power Line. It trades about -0.09 of its potential returns per unit of risk. Power Line Engineering is currently generating about -0.36 per unit of risk. If you would invest 6,225 in Airports of Thailand on September 3, 2024 and sell it today you would lose (150.00) from holding Airports of Thailand or give up 2.41% 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. Power Line Engineering
Performance |
| Timeline |
| Airports of Thailand |
| Power Line Engineering |
Airports and Power Line Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Airports and Power Line
The main advantage of trading using opposite Airports and Power Line positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Airports position performs unexpectedly, Power Line 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 Power Line will offset losses from the drop in Power Line's long position.| Airports vs. CP ALL Public | Airports vs. PTT Public | Airports vs. Kasikornbank Public | Airports vs. Bangkok Dusit Medical |
| Power Line vs. Asia Aviation Public | Power Line vs. Bangkok Dusit Medical | Power Line vs. Bangkok Expressway and | Power Line 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 Sign In To Macroaxis module to sign in to explore Macroaxis' wealth optimization platform and fintech modules.
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