Correlation Between Mahachai Hospital and Thonburi Medical
Can any of the company-specific risk be diversified away by investing in both Mahachai Hospital and Thonburi Medical 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 Mahachai Hospital and Thonburi Medical into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Mahachai Hospital Public and Thonburi Medical Centre, you can compare the effects of market volatilities on Mahachai Hospital and Thonburi Medical 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 Mahachai Hospital with a short position of Thonburi Medical. Check out your portfolio center. Please also check ongoing floating volatility patterns of Mahachai Hospital and Thonburi Medical.
Diversification Opportunities for Mahachai Hospital and Thonburi Medical
0.65 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Mahachai and Thonburi is 0.65. Overlapping area represents the amount of risk that can be diversified away by holding Mahachai Hospital Public and Thonburi Medical Centre in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Thonburi Medical Centre and Mahachai Hospital 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 Mahachai Hospital Public are associated (or correlated) with Thonburi Medical. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Thonburi Medical Centre has no effect on the direction of Mahachai Hospital i.e., Mahachai Hospital and Thonburi Medical go up and down completely randomly.
Pair Corralation between Mahachai Hospital and Thonburi Medical
Assuming the 90 days trading horizon Mahachai Hospital Public is expected to under-perform the Thonburi Medical. In addition to that, Mahachai Hospital is 1.15 times more volatile than Thonburi Medical Centre. It trades about -0.39 of its total potential returns per unit of risk. Thonburi Medical Centre is currently generating about 0.26 per unit of volatility. If you would invest 9,000 in Thonburi Medical Centre on August 27, 2024 and sell it today you would earn a total of 700.00 from holding Thonburi Medical Centre or generate 7.78% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Mahachai Hospital Public vs. Thonburi Medical Centre
Performance |
| Timeline |
| Mahachai Hospital Public |
| Thonburi Medical Centre |
Mahachai Hospital and Thonburi Medical Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Mahachai Hospital and Thonburi Medical
The main advantage of trading using opposite Mahachai Hospital and Thonburi Medical positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Mahachai Hospital position performs unexpectedly, Thonburi Medical 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 Thonburi Medical will offset losses from the drop in Thonburi Medical's long position.The idea behind Mahachai Hospital Public and Thonburi Medical Centre 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.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 Latest Portfolios module to quick portfolio dashboard that showcases your latest portfolios.
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