Correlation Between APPLIED MATERIALS and Bumrungrad Hospital

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Can any of the company-specific risk be diversified away by investing in both APPLIED MATERIALS and Bumrungrad Hospital 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 APPLIED MATERIALS and Bumrungrad Hospital into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between APPLIED MATERIALS and Bumrungrad Hospital Public, you can compare the effects of market volatilities on APPLIED MATERIALS and Bumrungrad Hospital 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 APPLIED MATERIALS with a short position of Bumrungrad Hospital. Check out your portfolio center. Please also check ongoing floating volatility patterns of APPLIED MATERIALS and Bumrungrad Hospital.

Diversification Opportunities for APPLIED MATERIALS and Bumrungrad Hospital

0.14
  Correlation Coefficient

Average diversification

The 3 months correlation between APPLIED and Bumrungrad is 0.14. Overlapping area represents the amount of risk that can be diversified away by holding APPLIED MATERIALS and Bumrungrad Hospital Public in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Bumrungrad Hospital and APPLIED MATERIALS 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 APPLIED MATERIALS are associated (or correlated) with Bumrungrad Hospital. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Bumrungrad Hospital has no effect on the direction of APPLIED MATERIALS i.e., APPLIED MATERIALS and Bumrungrad Hospital go up and down completely randomly.

Pair Corralation between APPLIED MATERIALS and Bumrungrad Hospital

Assuming the 90 days trading horizon APPLIED MATERIALS is expected to generate 0.83 times more return on investment than Bumrungrad Hospital. However, APPLIED MATERIALS is 1.21 times less risky than Bumrungrad Hospital. It trades about -0.01 of its potential returns per unit of risk. Bumrungrad Hospital Public is currently generating about -0.29 per unit of risk. If you would invest  17,008  in APPLIED MATERIALS on August 25, 2024 and sell it today you would lose (216.00) from holding APPLIED MATERIALS or give up 1.27% of portfolio value over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthInsignificant
Accuracy100.0%
ValuesDaily Returns

APPLIED MATERIALS  vs.  Bumrungrad Hospital Public

 Performance 
       Timeline  
APPLIED MATERIALS 

Risk-Adjusted Performance

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Weak
 
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Very Weak
Over the last 90 days APPLIED MATERIALS has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable basic indicators, APPLIED MATERIALS is not utilizing all of its potentials. The newest stock price uproar, may contribute to short-horizon losses for the private investors.
Bumrungrad Hospital 

Risk-Adjusted Performance

0 of 100

 
Weak
 
Strong
Very Weak
Over the last 90 days Bumrungrad Hospital Public has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest fragile performance, the Stock's basic indicators remain stable and the current disturbance on Wall Street may also be a sign of long-run gains for the company stockholders.

APPLIED MATERIALS and Bumrungrad Hospital Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with APPLIED MATERIALS and Bumrungrad Hospital

The main advantage of trading using opposite APPLIED MATERIALS and Bumrungrad Hospital positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if APPLIED MATERIALS position performs unexpectedly, Bumrungrad Hospital 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 Bumrungrad Hospital will offset losses from the drop in Bumrungrad Hospital's long position.
The idea behind APPLIED MATERIALS and Bumrungrad Hospital Public pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.
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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 Competition Analyzer module to analyze and compare many basic indicators for a group of related or unrelated entities.

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