Correlation Between Airports and Sri Trang
Can any of the company-specific risk be diversified away by investing in both Airports and Sri Trang 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 Sri Trang 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 Sri Trang Agro Industry, you can compare the effects of market volatilities on Airports and Sri Trang 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 Sri Trang. Check out your portfolio center. Please also check ongoing floating volatility patterns of Airports and Sri Trang.
Diversification Opportunities for Airports and Sri Trang
Poor diversification
The 3 months correlation between Airports and Sri is 0.68. Overlapping area represents the amount of risk that can be diversified away by holding Airports of Thailand and Sri Trang Agro Industry in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sri Trang Agro 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 Sri Trang. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Sri Trang Agro has no effect on the direction of Airports i.e., Airports and Sri Trang go up and down completely randomly.
Pair Corralation between Airports and Sri Trang
Assuming the 90 days trading horizon Airports of Thailand is expected to generate 0.44 times more return on investment than Sri Trang. However, Airports of Thailand is 2.25 times less risky than Sri Trang. It trades about -0.01 of its potential returns per unit of risk. Sri Trang Agro Industry is currently generating about -0.08 per unit of risk. If you would invest 6,225 in Airports of Thailand on September 5, 2024 and sell it today you would lose (25.00) from holding Airports of Thailand or give up 0.4% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Airports of Thailand vs. Sri Trang Agro Industry
Performance |
| Timeline |
| Airports of Thailand |
| Sri Trang Agro |
Airports and Sri Trang Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Airports and Sri Trang
The main advantage of trading using opposite Airports and Sri Trang positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Airports position performs unexpectedly, Sri Trang 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 Sri Trang will offset losses from the drop in Sri Trang's long position.| Airports vs. CP ALL Public | Airports vs. PTT Public | Airports vs. Kasikornbank Public | Airports vs. Bangkok Dusit Medical |
| Sri Trang vs. Sri Trang Gloves | Sri Trang vs. Charoen Pokphand Foods | Sri Trang vs. Thai Union Group | Sri Trang vs. The Siam Cement |
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 Comparator module to compare the composition, asset allocations and performance of any two portfolios in your account.
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