Correlation Between Holmen AB and Bumrungrad Hospital
Can any of the company-specific risk be diversified away by investing in both Holmen AB 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 Holmen AB and Bumrungrad Hospital into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Holmen AB and Bumrungrad Hospital Public, you can compare the effects of market volatilities on Holmen AB 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 Holmen AB with a short position of Bumrungrad Hospital. Check out your portfolio center. Please also check ongoing floating volatility patterns of Holmen AB and Bumrungrad Hospital.
Diversification Opportunities for Holmen AB and Bumrungrad Hospital
0.75 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Holmen and Bumrungrad is 0.75. Overlapping area represents the amount of risk that can be diversified away by holding Holmen AB and Bumrungrad Hospital Public in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Bumrungrad Hospital and Holmen AB 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 Holmen AB 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 Holmen AB i.e., Holmen AB and Bumrungrad Hospital go up and down completely randomly.
Pair Corralation between Holmen AB and Bumrungrad Hospital
Assuming the 90 days trading horizon Holmen AB is expected to generate 8.9 times less return on investment than Bumrungrad Hospital. But when comparing it to its historical volatility, Holmen AB is 3.88 times less risky than Bumrungrad Hospital. It trades about 0.03 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 82.00 in Bumrungrad Hospital Public on September 4, 2024 and sell it today you would earn a total of 478.00 from holding Bumrungrad Hospital Public or generate 582.93% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 99.8% |
| Values | Daily Returns |
Holmen AB vs. Bumrungrad Hospital Public
Performance |
| Timeline |
| Holmen AB |
| Bumrungrad Hospital |
Holmen AB and Bumrungrad Hospital Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Holmen AB and Bumrungrad Hospital
The main advantage of trading using opposite Holmen AB and Bumrungrad Hospital positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Holmen AB 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.| Holmen AB vs. QBE Insurance Group | Holmen AB vs. Unity Software | Holmen AB vs. LIFENET INSURANCE CO | Holmen AB vs. Safety Insurance Group |
| Bumrungrad Hospital vs. Superior Plus Corp | Bumrungrad Hospital vs. NMI Holdings | Bumrungrad Hospital vs. Origin Agritech | Bumrungrad Hospital vs. SIVERS SEMICONDUCTORS AB |
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 Options Analysis module to analyze and evaluate options and option chains as a potential hedge for your portfolios.
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