Correlation Between Airports and Thai Poly

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

Diversification Opportunities for Airports and Thai Poly

0.4

Correlation Coefficient

Airports  Thai Poly

Very weak diversification

The 3 months correlation between Airports and Thai is 0.4. Overlapping area represents the amount of risk that can be diversified away by holding Airports of Thailand and Thai Poly Acrylic in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Thai Poly Acrylic 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 Thai Poly. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Thai Poly Acrylic has no effect on the direction of Airports i.e., Airports and Thai Poly go up and down completely randomly.

Pair Corralation between Airports and Thai Poly

Assuming the 90 days trading horizon Airports of Thailand is expected to generate 0.27 times more return on investment than Thai Poly. However, Airports of Thailand is 3.67 times less risky than Thai Poly. It trades about 0.0 of its potential returns per unit of risk. Thai Poly Acrylic is currently generating about -0.04 per unit of risk. If you would invest  6,146  in Airports of Thailand on September 16, 2024 and sell it today you would lose (21.00) from holding Airports of Thailand or give up 0.34% of portfolio value over 90 days.

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

Airports of Thailand  vs.  Thai Poly Acrylic

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.

Thai Poly Acrylic

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Thai Poly Acrylic has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest weak performance, the Stock's basic indicators remain persistent and the latest mess on Wall Street may also be a sign of long-standing gains for the company institutional investors.

Pair Trading with Airports and Thai Poly

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

The idea behind Airports of Thailand and Thai Poly Acrylic 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 Portfolio Diagnostics module to use generated alerts and portfolio events aggregator to diagnose current holdings.