Correlation Between Bangkok Dusit and Lam Soon

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

Diversification Opportunities for Bangkok Dusit and Lam Soon

0.01
  Correlation Coefficient

Significant diversification

The 3 months correlation between Bangkok and Lam is 0.01. Overlapping area represents the amount of risk that can be diversified away by holding Bangkok Dusit Medical and Lam Soon Public in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Lam Soon Public and Bangkok Dusit 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 Bangkok Dusit Medical are associated (or correlated) with Lam Soon. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Lam Soon Public has no effect on the direction of Bangkok Dusit i.e., Bangkok Dusit and Lam Soon go up and down completely randomly.

Pair Corralation between Bangkok Dusit and Lam Soon

Assuming the 90 days trading horizon Bangkok Dusit Medical is expected to under-perform the Lam Soon. In addition to that, Bangkok Dusit is 2.06 times more volatile than Lam Soon Public. It trades about -0.05 of its total potential returns per unit of risk. Lam Soon Public is currently generating about 0.08 per unit of volatility. If you would invest  482.00  in Lam Soon Public on September 4, 2024 and sell it today you would earn a total of  18.00  from holding Lam Soon Public or generate 3.73% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthInsignificant
Accuracy100.0%
ValuesDaily Returns

Bangkok Dusit Medical  vs.  Lam Soon Public

 Performance 
       Timeline  
Bangkok Dusit Medical 

Risk-Adjusted Performance

0 of 100

 
Weak
 
Strong
Very Weak
Over the last 90 days Bangkok Dusit Medical has generated negative risk-adjusted returns adding no value to investors with long positions. Despite quite persistent forward-looking signals, Bangkok Dusit is not utilizing all of its potentials. The current stock price mess, may contribute to short-term losses for the institutional investors.
Lam Soon Public 

Risk-Adjusted Performance

6 of 100

 
Weak
 
Strong
OK
Compared to the overall equity markets, risk-adjusted returns on investments in Lam Soon Public are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. Despite quite persistent basic indicators, Lam Soon is not utilizing all of its potentials. The latest stock price mess, may contribute to short-term losses for the institutional investors.

Bangkok Dusit and Lam Soon Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Bangkok Dusit and Lam Soon

The main advantage of trading using opposite Bangkok Dusit and Lam Soon positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Bangkok Dusit position performs unexpectedly, Lam Soon 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 Lam Soon will offset losses from the drop in Lam Soon's long position.
The idea behind Bangkok Dusit Medical and Lam Soon 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.
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 Commodity Channel module to use Commodity Channel Index to analyze current equity momentum.

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