Correlation Between GM and Thai Nakarin
Can any of the company-specific risk be diversified away by investing in both GM and Thai Nakarin 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 GM and Thai Nakarin into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between General Motors and Thai Nakarin Hospital, you can compare the effects of market volatilities on GM and Thai Nakarin 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 GM with a short position of Thai Nakarin. Check out your portfolio center. Please also check ongoing floating volatility patterns of GM and Thai Nakarin.
Diversification Opportunities for GM and Thai Nakarin
0.56 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between GM and Thai is 0.56. Overlapping area represents the amount of risk that can be diversified away by holding General Motors and Thai Nakarin Hospital in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Thai Nakarin Hospital and GM 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 General Motors are associated (or correlated) with Thai Nakarin. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Thai Nakarin Hospital has no effect on the direction of GM i.e., GM and Thai Nakarin go up and down completely randomly.
Pair Corralation between GM and Thai Nakarin
Allowing for the 90-day total investment horizon GM is expected to generate 1.09 times less return on investment than Thai Nakarin. In addition to that, GM is 3.81 times more volatile than Thai Nakarin Hospital. It trades about 0.06 of its total potential returns per unit of risk. Thai Nakarin Hospital is currently generating about 0.26 per unit of volatility. If you would invest 3,568 in Thai Nakarin Hospital on September 5, 2024 and sell it today you would earn a total of 157.00 from holding Thai Nakarin Hospital or generate 4.4% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 95.65% |
| Values | Daily Returns |
General Motors vs. Thai Nakarin Hospital
Performance |
| Timeline |
| General Motors |
| Thai Nakarin Hospital |
GM and Thai Nakarin Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with GM and Thai Nakarin
The main advantage of trading using opposite GM and Thai Nakarin positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if GM position performs unexpectedly, Thai Nakarin 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 Nakarin will offset losses from the drop in Thai Nakarin's long position.The idea behind General Motors and Thai Nakarin Hospital pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.| Thai Nakarin vs. Vibhavadi Medical Center | Thai Nakarin vs. Ladprao General Hospital | Thai Nakarin vs. Ekachai Medical Care | Thai Nakarin vs. Chularat Hospital 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 Cryptocurrency Center module to build and monitor diversified portfolio of extremely risky digital assets and cryptocurrency.
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