Correlation Between BTS Group and Royal Orchid
Can any of the company-specific risk be diversified away by investing in both BTS Group and Royal Orchid 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 BTS Group and Royal Orchid into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between BTS Group Holdings and Royal Orchid Hotel, you can compare the effects of market volatilities on BTS Group and Royal Orchid 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 BTS Group with a short position of Royal Orchid. Check out your portfolio center. Please also check ongoing floating volatility patterns of BTS Group and Royal Orchid.
Diversification Opportunities for BTS Group and Royal Orchid
0.02 | Correlation Coefficient |
Significant diversification
The 3 months correlation between BTS and Royal is 0.02. Overlapping area represents the amount of risk that can be diversified away by holding BTS Group Holdings and Royal Orchid Hotel in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Royal Orchid Hotel and BTS Group 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 BTS Group Holdings are associated (or correlated) with Royal Orchid. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Royal Orchid Hotel has no effect on the direction of BTS Group i.e., BTS Group and Royal Orchid go up and down completely randomly.
Pair Corralation between BTS Group and Royal Orchid
Assuming the 90 days trading horizon BTS Group is expected to generate 40.75 times less return on investment than Royal Orchid. But when comparing it to its historical volatility, BTS Group Holdings is 39.57 times less risky than Royal Orchid. It trades about 0.08 of its potential returns per unit of risk. Royal Orchid Hotel is currently generating about 0.08 of returns per unit of risk over similar time horizon. If you would invest 250.00 in Royal Orchid Hotel on August 31, 2024 and sell it today you would lose (30.00) from holding Royal Orchid Hotel or give up 12.0% of portfolio value over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Insignificant |
Accuracy | 100.0% |
Values | Daily Returns |
BTS Group Holdings vs. Royal Orchid Hotel
Performance |
Timeline |
BTS Group Holdings |
Royal Orchid Hotel |
BTS Group and Royal Orchid Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with BTS Group and Royal Orchid
The main advantage of trading using opposite BTS Group and Royal Orchid positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if BTS Group position performs unexpectedly, Royal Orchid 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 Royal Orchid will offset losses from the drop in Royal Orchid's long position.BTS Group vs. Gulf Energy Development | BTS Group vs. Energy Absolute Public | BTS Group vs. WHA Public | BTS Group vs. Bangkok Expressway and |
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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 Crypto Correlations module to use cryptocurrency correlation module to diversify your cryptocurrency portfolio across multiple coins.
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