Correlation Between IMPERIAL TOBACCO and Bumrungrad Hospital
Can any of the company-specific risk be diversified away by investing in both IMPERIAL TOBACCO 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 IMPERIAL TOBACCO and Bumrungrad Hospital into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between IMPERIAL TOBACCO and Bumrungrad Hospital Public, you can compare the effects of market volatilities on IMPERIAL TOBACCO 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 IMPERIAL TOBACCO with a short position of Bumrungrad Hospital. Check out your portfolio center. Please also check ongoing floating volatility patterns of IMPERIAL TOBACCO and Bumrungrad Hospital.
Diversification Opportunities for IMPERIAL TOBACCO and Bumrungrad Hospital
-0.7 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between IMPERIAL and Bumrungrad is -0.7. Overlapping area represents the amount of risk that can be diversified away by holding IMPERIAL TOBACCO and Bumrungrad Hospital Public in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Bumrungrad Hospital and IMPERIAL TOBACCO 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 IMPERIAL TOBACCO 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 IMPERIAL TOBACCO i.e., IMPERIAL TOBACCO and Bumrungrad Hospital go up and down completely randomly.
Pair Corralation between IMPERIAL TOBACCO and Bumrungrad Hospital
Assuming the 90 days trading horizon IMPERIAL TOBACCO is expected to generate 4.05 times less return on investment than Bumrungrad Hospital. But when comparing it to its historical volatility, IMPERIAL TOBACCO is 7.66 times less risky than Bumrungrad Hospital. It trades about 0.15 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 171.00 in Bumrungrad Hospital Public on September 2, 2024 and sell it today you would earn a total of 389.00 from holding Bumrungrad Hospital Public or generate 227.49% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
IMPERIAL TOBACCO vs. Bumrungrad Hospital Public
Performance |
| Timeline |
| IMPERIAL TOBACCO |
| Bumrungrad Hospital |
IMPERIAL TOBACCO and Bumrungrad Hospital Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with IMPERIAL TOBACCO and Bumrungrad Hospital
The main advantage of trading using opposite IMPERIAL TOBACCO and Bumrungrad Hospital positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if IMPERIAL TOBACCO 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.| IMPERIAL TOBACCO vs. SIVERS SEMICONDUCTORS AB | IMPERIAL TOBACCO vs. Darden Restaurants | IMPERIAL TOBACCO vs. Reliance Steel Aluminum | IMPERIAL TOBACCO vs. Q2M Managementberatung AG |
| Bumrungrad Hospital vs. Richter Gedeon Vegyszeti | Bumrungrad Hospital vs. Charoen Pokphand Foods | Bumrungrad Hospital vs. Superior Plus Corp | 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 Diagnostics module to use generated alerts and portfolio events aggregator to diagnose current holdings.
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