Correlation Between DiamondRock Hospitality and Bumrungrad Hospital
Can any of the company-specific risk be diversified away by investing in both DiamondRock Hospitality and Bumrungrad Hospital 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 DiamondRock Hospitality and Bumrungrad Hospital into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between DiamondRock Hospitality and Bumrungrad Hospital Public, you can compare the effects of market volatilities on DiamondRock Hospitality and Bumrungrad Hospital 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 DiamondRock Hospitality with a short position of Bumrungrad Hospital. Check out your portfolio center. Please also check ongoing floating volatility patterns of DiamondRock Hospitality and Bumrungrad Hospital.
Diversification Opportunities for DiamondRock Hospitality and Bumrungrad Hospital
-0.37 | Correlation Coefficient |
Very good diversification
The 3 months correlation between DiamondRock and Bumrungrad is -0.37. Overlapping area represents the amount of risk that can be diversified away by holding DiamondRock Hospitality and Bumrungrad Hospital Public in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Bumrungrad Hospital and DiamondRock Hospitality 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 DiamondRock Hospitality are associated (or correlated) with Bumrungrad Hospital. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Bumrungrad Hospital has no effect on the direction of DiamondRock Hospitality i.e., DiamondRock Hospitality and Bumrungrad Hospital go up and down completely randomly.
Pair Corralation between DiamondRock Hospitality and Bumrungrad Hospital
Assuming the 90 days horizon DiamondRock Hospitality is expected to generate 6.62 times less return on investment than Bumrungrad Hospital. But when comparing it to its historical volatility, DiamondRock Hospitality is 1.95 times less risky than Bumrungrad Hospital. It trades about 0.02 of its potential returns per unit of risk. Bumrungrad Hospital Public is currently generating about 0.08 of returns per unit of risk over similar time horizon. If you would invest 83.00 in Bumrungrad Hospital Public on August 28, 2024 and sell it today you would earn a total of 477.00 from holding Bumrungrad Hospital Public or generate 574.7% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
DiamondRock Hospitality vs. Bumrungrad Hospital Public
Performance |
| Timeline |
| DiamondRock Hospitality |
| Bumrungrad Hospital |
DiamondRock Hospitality and Bumrungrad Hospital Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with DiamondRock Hospitality and Bumrungrad Hospital
The main advantage of trading using opposite DiamondRock Hospitality and Bumrungrad Hospital positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if DiamondRock Hospitality position performs unexpectedly, Bumrungrad Hospital 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 Bumrungrad Hospital will offset losses from the drop in Bumrungrad Hospital's long position.The idea behind DiamondRock Hospitality and Bumrungrad Hospital Public 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.| Bumrungrad Hospital vs. Ramsay Health Care | Bumrungrad Hospital vs. Superior Plus Corp | Bumrungrad Hospital vs. NMI Holdings | Bumrungrad Hospital vs. Origin Agritech |
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 File Import module to quickly import all of your third-party portfolios from your local drive in csv format.
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