Correlation Between BCPG Public and Bangkok Aviation
Can any of the company-specific risk be diversified away by investing in both BCPG Public and Bangkok Aviation 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 BCPG Public and Bangkok Aviation into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between BCPG Public and Bangkok Aviation Fuel, you can compare the effects of market volatilities on BCPG Public and Bangkok Aviation 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 BCPG Public with a short position of Bangkok Aviation. Check out your portfolio center. Please also check ongoing floating volatility patterns of BCPG Public and Bangkok Aviation.
Diversification Opportunities for BCPG Public and Bangkok Aviation
0.93 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between BCPG and Bangkok is 0.93. Overlapping area represents the amount of risk that can be diversified away by holding BCPG Public and Bangkok Aviation Fuel in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Bangkok Aviation Fuel and BCPG Public 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 BCPG Public are associated (or correlated) with Bangkok Aviation. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Bangkok Aviation Fuel has no effect on the direction of BCPG Public i.e., BCPG Public and Bangkok Aviation go up and down completely randomly.
Pair Corralation between BCPG Public and Bangkok Aviation
Assuming the 90 days trading horizon BCPG Public is expected to under-perform the Bangkok Aviation. But the stock apears to be less risky and, when comparing its historical volatility, BCPG Public is 1.47 times less risky than Bangkok Aviation. The stock trades about -0.55 of its potential returns per unit of risk. The Bangkok Aviation Fuel is currently generating about -0.31 of returns per unit of risk over similar time horizon. If you would invest 1,470 in Bangkok Aviation Fuel on September 1, 2024 and sell it today you would lose (200.00) from holding Bangkok Aviation Fuel or give up 13.61% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 95.65% |
| Values | Daily Returns |
BCPG Public vs. Bangkok Aviation Fuel
Performance |
| Timeline |
| BCPG Public |
| Bangkok Aviation Fuel |
BCPG Public and Bangkok Aviation Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with BCPG Public and Bangkok Aviation
The main advantage of trading using opposite BCPG Public and Bangkok Aviation positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if BCPG Public position performs unexpectedly, Bangkok Aviation 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 Bangkok Aviation will offset losses from the drop in Bangkok Aviation's long position.The idea behind BCPG Public and Bangkok Aviation Fuel 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.| Bangkok Aviation vs. Bangchak Public | Bangkok Aviation vs. Airports of Thailand | Bangkok Aviation vs. AP Public | Bangkok Aviation vs. Central Pattana 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 Technical Analysis module to check basic technical indicators and analysis based on most latest market data.
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