Correlation Between Airports and Internet Thailand

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

Diversification Opportunities for Airports and Internet Thailand

-0.52

Correlation Coefficient

Airports  Internet Thailand

Excellent diversification

The 3 months correlation between Airports and Internet is -0.52. Overlapping area represents the amount of risk that can be diversified away by holding Airports of Thailand and Internet Thailand Public in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Internet Thailand 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 Internet Thailand. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Internet Thailand Public has no effect on the direction of Airports i.e., Airports and Internet Thailand go up and down completely randomly.

Pair Corralation between Airports and Internet Thailand

Assuming the 90 days trading horizon Airports is expected to generate 99.28 times less return on investment than Internet Thailand. But when comparing it to its historical volatility, Airports of Thailand is 5.5 times less risky than Internet Thailand. It trades about 0.01 of its potential returns per unit of risk. Internet Thailand Public is currently generating about 0.11 of returns per unit of risk over similar time horizon. If you would invest  462.00  in Internet Thailand Public on September 14, 2024 and sell it today you would earn a total of  143.00  from holding Internet Thailand Public or generate 30.95% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	98.36%
Values	Daily Returns

Airports of Thailand  vs.  Internet Thailand Public

Airports of Thailand

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Airports of Thailand has generated negative risk-adjusted returns adding no value to investors with long positions. Despite quite persistent basic indicators, Airports is not utilizing all of its potentials. The current stock price mess, may contribute to short-term losses for the institutional investors.

Internet Thailand Public

Risk-Adjusted Performance

8 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Internet Thailand Public are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. Despite quite conflicting forward-looking signals, Internet Thailand disclosed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Airports and Internet Thailand

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

The idea behind Airports of Thailand and Internet Thailand 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 Positions Ratings module to determine portfolio positions ratings based on digital equity recommendations. Macroaxis instant position ratings are based on combination of fundamental analysis and risk-adjusted market performance.