Correlation Between Bualuang Office and Bangkok Dusit

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

By analyzing existing cross correlation between Bualuang Office Leasehold and Bangkok Dusit Medical, you can compare the effects of market volatilities on Bualuang Office and Bangkok Dusit 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 Bualuang Office with a short position of Bangkok Dusit. Check out your portfolio center. Please also check ongoing floating volatility patterns of Bualuang Office and Bangkok Dusit.

Diversification Opportunities for Bualuang Office and Bangkok Dusit

0.05

Correlation Coefficient

Bualuang Office  Bangkok Dusit

Significant diversification

The 3 months correlation between Bualuang and Bangkok is 0.05. Overlapping area represents the amount of risk that can be diversified away by holding Bualuang Office Leasehold and Bangkok Dusit Medical in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Bangkok Dusit Medical and Bualuang Office 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 Bualuang Office Leasehold are associated (or correlated) with Bangkok Dusit. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Bangkok Dusit Medical has no effect on the direction of Bualuang Office i.e., Bualuang Office and Bangkok Dusit go up and down completely randomly.

Pair Corralation between Bualuang Office and Bangkok Dusit

Assuming the 90 days trading horizon Bualuang Office Leasehold is expected to under-perform the Bangkok Dusit. In addition to that, Bualuang Office is 9.32 times more volatile than Bangkok Dusit Medical. It trades about -0.12 of its total potential returns per unit of risk. Bangkok Dusit Medical is currently generating about -0.22 per unit of volatility. If you would invest  2,975  in Bangkok Dusit Medical on September 15, 2024 and sell it today you would lose (525.00) from holding Bangkok Dusit Medical or give up 17.65% of portfolio value over 90 days.

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

Bualuang Office Leasehold  vs.  Bangkok Dusit Medical

Bualuang Office Leasehold

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Bualuang Office Leasehold has generated negative risk-adjusted returns adding no value to investors with long positions. Despite weak performance in the last few months, the Stock's basic indicators remain somewhat strong which may send shares a bit higher in January 2025. The current disturbance may also be a sign of long term up-swing for the company investors.

Bangkok Dusit Medical

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Bangkok Dusit Medical 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 Bualuang Office and Bangkok Dusit

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

The idea behind Bualuang Office Leasehold and Bangkok Dusit Medical 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 CEOs Directory module to screen CEOs from public companies around the world.