Correlation Between Bangkok Dusit and Thai Capital
Can any of the company-specific risk be diversified away by investing in both Bangkok Dusit and Thai Capital 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 Thai Capital 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 Thai Capital, you can compare the effects of market volatilities on Bangkok Dusit and Thai Capital 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 Thai Capital. Check out your portfolio center. Please also check ongoing floating volatility patterns of Bangkok Dusit and Thai Capital.
Diversification Opportunities for Bangkok Dusit and Thai Capital
0.38 | Correlation Coefficient |
Weak diversification
The 3 months correlation between Bangkok and Thai is 0.38. Overlapping area represents the amount of risk that can be diversified away by holding Bangkok Dusit Medical and Thai Capital in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Thai Capital 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 Thai Capital. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Thai Capital has no effect on the direction of Bangkok Dusit i.e., Bangkok Dusit and Thai Capital go up and down completely randomly.
Pair Corralation between Bangkok Dusit and Thai Capital
Assuming the 90 days trading horizon Bangkok Dusit Medical is expected to under-perform the Thai Capital. But the stock apears to be less risky and, when comparing its historical volatility, Bangkok Dusit Medical is 34.8 times less risky than Thai Capital. The stock trades about -0.01 of its potential returns per unit of risk. The Thai Capital is currently generating about 0.04 of returns per unit of risk over similar time horizon. If you would invest 81.00 in Thai Capital on September 12, 2024 and sell it today you would lose (41.00) from holding Thai Capital or give up 50.62% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Bangkok Dusit Medical vs. Thai Capital
Performance |
| Timeline |
| Bangkok Dusit Medical |
| Thai Capital |
Bangkok Dusit and Thai Capital Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Bangkok Dusit and Thai Capital
The main advantage of trading using opposite Bangkok Dusit and Thai Capital positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Bangkok Dusit position performs unexpectedly, Thai Capital 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 Thai Capital will offset losses from the drop in Thai Capital's long position.| Bangkok Dusit vs. Bumrungrad Hospital Public | Bangkok Dusit vs. Bangkok Chain Hospital | Bangkok Dusit vs. Ramkhamhaeng Hospital Public | Bangkok Dusit vs. Vibhavadi Medical Center |
| Thai Capital vs. Tata Steel Public | Thai Capital vs. TTCL Public | Thai Capital vs. Thaifoods Group Public | Thai Capital vs. TMT Steel 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 Risk-Return Analysis module to view associations between returns expected from investment and the risk you assume.
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