Correlation Between Better World and Akkhie Prakarn
Can any of the company-specific risk be diversified away by investing in both Better World and Akkhie Prakarn 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 Better World and Akkhie Prakarn into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Better World Green and Akkhie Prakarn Public, you can compare the effects of market volatilities on Better World and Akkhie Prakarn 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 Better World with a short position of Akkhie Prakarn. Check out your portfolio center. Please also check ongoing floating volatility patterns of Better World and Akkhie Prakarn.
Diversification Opportunities for Better World and Akkhie Prakarn
0.68 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Better and Akkhie is 0.68. Overlapping area represents the amount of risk that can be diversified away by holding Better World Green and Akkhie Prakarn Public in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Akkhie Prakarn Public and Better World 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 Better World Green are associated (or correlated) with Akkhie Prakarn. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Akkhie Prakarn Public has no effect on the direction of Better World i.e., Better World and Akkhie Prakarn go up and down completely randomly.
Pair Corralation between Better World and Akkhie Prakarn
Assuming the 90 days trading horizon Better World Green is expected to generate 0.85 times more return on investment than Akkhie Prakarn. However, Better World Green is 1.18 times less risky than Akkhie Prakarn. It trades about -0.06 of its potential returns per unit of risk. Akkhie Prakarn Public is currently generating about -0.36 per unit of risk. If you would invest 44.00 in Better World Green on September 1, 2024 and sell it today you would lose (2.00) from holding Better World Green or give up 4.55% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Better World Green vs. Akkhie Prakarn Public
Performance |
| Timeline |
| Better World Green |
| Akkhie Prakarn Public |
Better World and Akkhie Prakarn Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Better World and Akkhie Prakarn
The main advantage of trading using opposite Better World and Akkhie Prakarn positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Better World position performs unexpectedly, Akkhie Prakarn 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 Akkhie Prakarn will offset losses from the drop in Akkhie Prakarn's long position.| Better World vs. Gulf Energy Development | Better World vs. Energy Absolute Public | Better World vs. WHA Public | Better World 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 Portfolio Volatility module to check portfolio volatility and analyze historical return density to properly model market risk.
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