Correlation Between CP ALL and Airports
Can any of the company-specific risk be diversified away by investing in both CP ALL 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 CP ALL and Airports into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between CP ALL Public and Airports of Thailand, you can compare the effects of market volatilities on CP ALL 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 CP ALL with a short position of Airports. Check out your portfolio center. Please also check ongoing floating volatility patterns of CP ALL and Airports.
Diversification Opportunities for CP ALL and Airports
Poor diversification
The 3 months correlation between CPALL and Airports is 0.69. Overlapping area represents the amount of risk that can be diversified away by holding CP ALL Public 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 CP ALL 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 CP ALL Public 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 CP ALL i.e., CP ALL and Airports go up and down completely randomly.
Pair Corralation between CP ALL and Airports
Assuming the 90 days trading horizon CP ALL Public is expected to under-perform the Airports. In addition to that, CP ALL is 1.47 times more volatile than Airports of Thailand. It trades about -0.03 of its total potential returns per unit of risk. Airports of Thailand is currently generating about 0.02 per unit of volatility. If you would invest 5,430 in Airports of Thailand on November 3, 2024 and sell it today you would earn a total of 95.00 from holding Airports of Thailand or generate 1.75% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
CP ALL Public vs. Airports of Thailand
Performance |
| Timeline |
| CP ALL Public |
| Airports of Thailand |
CP ALL and Airports Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with CP ALL and Airports
The main advantage of trading using opposite CP ALL and Airports positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if CP ALL 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.| CP ALL vs. Airports of Thailand | CP ALL vs. PTT Public | CP ALL vs. Bangkok Dusit Medical | CP ALL vs. Kasikornbank Public |
| 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 AI Portfolio Architect module to use AI to generate optimal portfolios and find profitable investment opportunities.
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