Correlation Between Airports and Kang Yong

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

Diversification Opportunities for Airports and Kang Yong

0.34

Correlation Coefficient

Airports  Kang Yong

Weak diversification

The 3 months correlation between Airports and Kang is 0.34. Overlapping area represents the amount of risk that can be diversified away by holding Airports of Thailand and Kang Yong Electric in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Kang Yong Electric 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 Kang Yong. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Kang Yong Electric has no effect on the direction of Airports i.e., Airports and Kang Yong go up and down completely randomly.

Pair Corralation between Airports and Kang Yong

Assuming the 90 days trading horizon Airports of Thailand is expected to under-perform the Kang Yong. In addition to that, Airports is 2.41 times more volatile than Kang Yong Electric. It trades about -0.06 of its total potential returns per unit of risk. Kang Yong Electric is currently generating about -0.03 per unit of volatility. If you would invest  29,100  in Kang Yong Electric on September 27, 2024 and sell it today you would lose (300.00) from holding Kang Yong Electric or give up 1.03% of portfolio value over 90 days.

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

Airports of Thailand  vs.  Kang Yong Electric

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.

Kang Yong Electric

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Kang Yong Electric has generated negative risk-adjusted returns adding no value to investors with long positions. Despite quite persistent technical and fundamental indicators, Kang Yong 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 Airports and Kang Yong

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

The idea behind Airports of Thailand and Kang Yong Electric 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 Balance Of Power module to check stock momentum by analyzing Balance Of Power indicator and other technical ratios.