Correlation Between Asia Medical and Thonburi Medical

Can any of the company-specific risk be diversified away by investing in both Asia Medical 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 Asia Medical and Thonburi Medical into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Asia Medical Agricultural and Thonburi Medical Centre, you can compare the effects of market volatilities on Asia Medical 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 Asia Medical with a short position of Thonburi Medical. Check out your portfolio center. Please also check ongoing floating volatility patterns of Asia Medical and Thonburi Medical.

Diversification Opportunities for Asia Medical and Thonburi Medical

0.57

Correlation Coefficient

Asia Medical  Thonburi Medical

Very weak diversification

The 3 months correlation between Asia and Thonburi is 0.57. Overlapping area represents the amount of risk that can be diversified away by holding Asia Medical Agricultural 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 Asia Medical 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 Asia Medical Agricultural 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 Asia Medical i.e., Asia Medical and Thonburi Medical go up and down completely randomly.

Pair Corralation between Asia Medical and Thonburi Medical

Assuming the 90 days trading horizon Asia Medical Agricultural is expected to under-perform the Thonburi Medical. In addition to that, Asia Medical is 2.25 times more volatile than Thonburi Medical Centre. It trades about -0.01 of its total potential returns per unit of risk. Thonburi Medical Centre is currently generating about 0.04 per unit of volatility. If you would invest  9,250  in Thonburi Medical Centre on September 14, 2024 and sell it today you would earn a total of  200.00  from holding Thonburi Medical Centre or generate 2.16% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	100.0%
Values	Daily Returns

Asia Medical Agricultural  vs.  Thonburi Medical Centre

Asia Medical Agricultural

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Asia Medical Agricultural has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong fundamental drivers, Asia Medical is not utilizing all of its potentials. The latest stock price disturbance, may contribute to short-term losses for the investors.

Thonburi Medical Centre

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Thonburi Medical Centre are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. Despite quite persistent technical indicators, Thonburi Medical is not utilizing all of its potentials. The latest stock price mess, may contribute to short-term losses for the institutional investors.

Pair Trading with Asia Medical and Thonburi Medical

The main advantage of trading using opposite Asia Medical and Thonburi Medical positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Asia Medical 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 Asia Medical Agricultural 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.

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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 Equity Valuation module to check real value of public entities based on technical and fundamental data.