Correlation Between Airports and BPS TECHNOLOGY

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

By analyzing existing cross correlation between Airports of Thailand and BPS TECHNOLOGY PUBLIC, you can compare the effects of market volatilities on Airports and BPS TECHNOLOGY 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 Airports with a short position of BPS TECHNOLOGY. Check out your portfolio center. Please also check ongoing floating volatility patterns of Airports and BPS TECHNOLOGY.

Diversification Opportunities for Airports and BPS TECHNOLOGY

0.16

Correlation Coefficient

Airports  BPS TECHNOLOGY

Average diversification

The 3 months correlation between Airports and BPS is 0.16. Overlapping area represents the amount of risk that can be diversified away by holding Airports of Thailand and BPS TECHNOLOGY PUBLIC in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on BPS TECHNOLOGY PUBLIC and Airports 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 Airports of Thailand are associated (or correlated) with BPS TECHNOLOGY. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of BPS TECHNOLOGY PUBLIC has no effect on the direction of Airports i.e., Airports and BPS TECHNOLOGY go up and down completely randomly.

Pair Corralation between Airports and BPS TECHNOLOGY

Assuming the 90 days trading horizon Airports of Thailand is expected to generate 11.41 times more return on investment than BPS TECHNOLOGY. However, Airports is 11.41 times more volatile than BPS TECHNOLOGY PUBLIC. It trades about 0.06 of its potential returns per unit of risk. BPS TECHNOLOGY PUBLIC is currently generating about -0.06 per unit of risk. If you would invest  7,393  in Airports of Thailand on September 4, 2024 and sell it today you would lose (1,193) from holding Airports of Thailand or give up 16.14% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	33.61%
Values	Daily Returns

Airports of Thailand  vs.  BPS TECHNOLOGY PUBLIC

Airports of Thailand

Risk-Adjusted Performance

8 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Airports of Thailand are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak fundamental drivers, Airports sustained solid returns over the last few months and may actually be approaching a breakup point.

BPS TECHNOLOGY PUBLIC

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days BPS TECHNOLOGY PUBLIC has generated negative risk-adjusted returns adding no value to investors with long positions. Despite weak performance in the last few months, the Stock's basic indicators remain quite persistent which may send shares a bit higher in January 2025. The latest mess may also be a sign of long-standing up-swing for the company institutional investors.

Pair Trading with Airports and BPS TECHNOLOGY

The main advantage of trading using opposite Airports and BPS TECHNOLOGY positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Airports position performs unexpectedly, BPS TECHNOLOGY 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 BPS TECHNOLOGY will offset losses from the drop in BPS TECHNOLOGY's long position.

The idea behind Airports of Thailand and BPS TECHNOLOGY 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.

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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 Risk-Return Analysis module to view associations between returns expected from investment and the risk you assume.