Correlation Between Airports and TCM Public
Can any of the company-specific risk be diversified away by investing in both Airports and TCM Public 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 TCM Public 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 TCM Public, you can compare the effects of market volatilities on Airports and TCM Public 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 TCM Public. Check out your portfolio center. Please also check ongoing floating volatility patterns of Airports and TCM Public.
Diversification Opportunities for Airports and TCM Public
0.56 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Airports and TCM is 0.56. Overlapping area represents the amount of risk that can be diversified away by holding Airports of Thailand and TCM Public in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on TCM 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 TCM Public. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of TCM Public has no effect on the direction of Airports i.e., Airports and TCM Public go up and down completely randomly.
Pair Corralation between Airports and TCM Public
Assuming the 90 days trading horizon Airports of Thailand is expected to under-perform the TCM Public. But the stock apears to be less risky and, when comparing its historical volatility, Airports of Thailand is 40.72 times less risky than TCM Public. The stock trades about -0.03 of its potential returns per unit of risk. The TCM Public is currently generating about 0.04 of returns per unit of risk over similar time horizon. If you would invest 173.00 in TCM Public on August 31, 2024 and sell it today you would lose (101.00) from holding TCM Public or give up 58.38% 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. TCM Public
Performance |
| Timeline |
| Airports of Thailand |
| TCM Public |
Airports and TCM Public Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Airports and TCM Public
The main advantage of trading using opposite Airports and TCM Public positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Airports position performs unexpectedly, TCM Public 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 TCM Public will offset losses from the drop in TCM Public's long position.| Airports vs. CP ALL Public | Airports vs. PTT Public | Airports vs. Kasikornbank Public | Airports vs. Bangkok Dusit Medical |
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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 Premium Stories module to follow Macroaxis premium stories from verified contributors across different equity types, categories and coverage scope.
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