Correlation Between Bangkok Ranch and Airports
Can any of the company-specific risk be diversified away by investing in both Bangkok Ranch and Airports 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 Ranch and Airports into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Bangkok Ranch PCL and Airports of Thailand, you can compare the effects of market volatilities on Bangkok Ranch and Airports 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 Ranch with a short position of Airports. Check out your portfolio center. Please also check ongoing floating volatility patterns of Bangkok Ranch and Airports.
Diversification Opportunities for Bangkok Ranch and Airports
0.4 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Bangkok and Airports is 0.4. Overlapping area represents the amount of risk that can be diversified away by holding Bangkok Ranch PCL and Airports of Thailand in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Airports of Thailand and Bangkok Ranch 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 Ranch PCL are associated (or correlated) with Airports. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Airports of Thailand has no effect on the direction of Bangkok Ranch i.e., Bangkok Ranch and Airports go up and down completely randomly.
Pair Corralation between Bangkok Ranch and Airports
Assuming the 90 days horizon Bangkok Ranch PCL is expected to under-perform the Airports. But the stock apears to be less risky and, when comparing its historical volatility, Bangkok Ranch PCL is 3.73 times less risky than Airports. The stock trades about -0.08 of its potential returns per unit of risk. The Airports of Thailand is currently generating about 0.04 of returns per unit of risk over similar time horizon. If you would invest 5,998 in Airports of Thailand on September 12, 2024 and sell it today you would earn a total of 52.00 from holding Airports of Thailand or generate 0.87% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Bangkok Ranch PCL vs. Airports of Thailand
Performance |
| Timeline |
| Bangkok Ranch PCL |
| Airports of Thailand |
Bangkok Ranch and Airports Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Bangkok Ranch and Airports
The main advantage of trading using opposite Bangkok Ranch and Airports positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Bangkok Ranch position performs unexpectedly, Airports 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 Airports will offset losses from the drop in Airports' long position.| Bangkok Ranch vs. GFPT Public | Bangkok Ranch vs. Dynasty Ceramic Public | Bangkok Ranch vs. Haad Thip Public | Bangkok Ranch vs. The Erawan Group |
| Airports vs. CP ALL Public | Airports vs. PTT Public | Airports vs. Kasikornbank Public | Airports vs. Bangkok Dusit Medical |
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 Investing Opportunities module to build portfolios using our predefined set of ideas and optimize them against your investing preferences.
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