Correlation Between Airports and CPN Commercial

Can any of the company-specific risk be diversified away by investing in both Airports and CPN Commercial 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 CPN Commercial 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 CPN Commercial Growth, you can compare the effects of market volatilities on Airports and CPN Commercial 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 CPN Commercial. Check out your portfolio center. Please also check ongoing floating volatility patterns of Airports and CPN Commercial.

Diversification Opportunities for Airports and CPN Commercial

0.19

Correlation Coefficient

Airports  CPN Commercial

Average diversification

The 3 months correlation between Airports and CPN is 0.19. Overlapping area represents the amount of risk that can be diversified away by holding Airports of Thailand and CPN Commercial Growth in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on CPN Commercial Growth 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 CPN Commercial. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of CPN Commercial Growth has no effect on the direction of Airports i.e., Airports and CPN Commercial go up and down completely randomly.

Pair Corralation between Airports and CPN Commercial

Assuming the 90 days trading horizon Airports of Thailand is expected to generate 94.24 times more return on investment than CPN Commercial. However, Airports is 94.24 times more volatile than CPN Commercial Growth. It trades about 0.11 of its potential returns per unit of risk. CPN Commercial Growth is currently generating about 0.07 per unit of risk. If you would invest  7,070  in Airports of Thailand on September 5, 2024 and sell it today you would lose (870.00) from holding Airports of Thailand or give up 12.31% of portfolio value over 90 days.

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

Airports of Thailand  vs.  CPN Commercial Growth

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.

CPN Commercial Growth

Risk-Adjusted Performance

5 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in CPN Commercial Growth are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. Despite somewhat strong fundamental drivers, CPN Commercial is not utilizing all of its potentials. The latest stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Airports and CPN Commercial

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

The idea behind Airports of Thailand and CPN Commercial Growth 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 FinTech Suite module to use AI to screen and filter profitable investment opportunities.