Correlation Between Airports and Tropical Canning
Can any of the company-specific risk be diversified away by investing in both Airports and Tropical Canning 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 Tropical Canning 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 Tropical Canning Public, you can compare the effects of market volatilities on Airports and Tropical Canning 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 Tropical Canning. Check out your portfolio center. Please also check ongoing floating volatility patterns of Airports and Tropical Canning.
Diversification Opportunities for Airports and Tropical Canning
0.3 | Correlation Coefficient |
Weak diversification
The 3 months correlation between Airports and Tropical is 0.3. Overlapping area represents the amount of risk that can be diversified away by holding Airports of Thailand and Tropical Canning Public in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Tropical Canning 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 Tropical Canning. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Tropical Canning Public has no effect on the direction of Airports i.e., Airports and Tropical Canning go up and down completely randomly.
Pair Corralation between Airports and Tropical Canning
Assuming the 90 days trading horizon Airports is expected to generate 158.98 times less return on investment than Tropical Canning. But when comparing it to its historical volatility, Airports of Thailand is 54.64 times less risky than Tropical Canning. It trades about 0.02 of its potential returns per unit of risk. Tropical Canning Public is currently generating about 0.06 of returns per unit of risk over similar time horizon. If you would invest 592.00 in Tropical Canning Public on September 4, 2024 and sell it today you would earn a total of 103.00 from holding Tropical Canning Public or generate 17.4% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Airports of Thailand vs. Tropical Canning Public
Performance |
| Timeline |
| Airports of Thailand |
| Tropical Canning Public |
Airports and Tropical Canning Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Airports and Tropical Canning
The main advantage of trading using opposite Airports and Tropical Canning positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Airports position performs unexpectedly, Tropical Canning 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 Tropical Canning will offset losses from the drop in Tropical Canning's long position.| Airports vs. CP ALL Public | Airports vs. PTT Public | Airports vs. Kasikornbank Public | Airports vs. Bangkok Dusit Medical |
| Tropical Canning vs. Airports of Thailand | Tropical Canning vs. PTT Public | Tropical Canning vs. Bangkok Dusit Medical | Tropical Canning vs. Kasikornbank Public |
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 Bollinger Bands module to use Bollinger Bands indicator to analyze target price for a given investing horizon.
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