Correlation Between Asia Plus and Bangkok Aviation

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

By analyzing existing cross correlation between Asia Plus Group and Bangkok Aviation Fuel, you can compare the effects of market volatilities on Asia Plus and Bangkok Aviation 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 Asia Plus with a short position of Bangkok Aviation. Check out your portfolio center. Please also check ongoing floating volatility patterns of Asia Plus and Bangkok Aviation.

Diversification Opportunities for Asia Plus and Bangkok Aviation

0.59

Correlation Coefficient

Asia Plus  Bangkok Aviation

Very weak diversification

The 3 months correlation between Asia and Bangkok is 0.59. Overlapping area represents the amount of risk that can be diversified away by holding Asia Plus Group and Bangkok Aviation Fuel in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Bangkok Aviation Fuel and Asia Plus 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 Asia Plus Group are associated (or correlated) with Bangkok Aviation. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Bangkok Aviation Fuel has no effect on the direction of Asia Plus i.e., Asia Plus and Bangkok Aviation go up and down completely randomly.

Pair Corralation between Asia Plus and Bangkok Aviation

Assuming the 90 days trading horizon Asia Plus Group is expected to generate 0.41 times more return on investment than Bangkok Aviation. However, Asia Plus Group is 2.45 times less risky than Bangkok Aviation. It trades about -0.05 of its potential returns per unit of risk. Bangkok Aviation Fuel is currently generating about -0.15 per unit of risk. If you would invest  250.00  in Asia Plus Group on September 13, 2024 and sell it today you would lose (8.00) from holding Asia Plus Group or give up 3.2% of portfolio value over 90 days.

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

Asia Plus Group  vs.  Bangkok Aviation Fuel

Asia Plus Group

Risk-Adjusted Performance

0 of 100

Very Weak

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

Bangkok Aviation Fuel

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Bangkok Aviation Fuel has generated negative risk-adjusted returns adding no value to investors with long positions. Despite conflicting performance in the last few months, the Stock's forward-looking signals 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 Asia Plus and Bangkok Aviation

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

The idea behind Asia Plus Group and Bangkok Aviation Fuel 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 Idea Analyzer module to analyze all characteristics, volatility and risk-adjusted return of Macroaxis ideas.