Correlation Between Bangkok Chain and Chularat Hospital

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

By analyzing existing cross correlation between Bangkok Chain Hospital and Chularat Hospital Public, you can compare the effects of market volatilities on Bangkok Chain and Chularat Hospital 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 Bangkok Chain with a short position of Chularat Hospital. Check out your portfolio center. Please also check ongoing floating volatility patterns of Bangkok Chain and Chularat Hospital.

Diversification Opportunities for Bangkok Chain and Chularat Hospital

0.54

Correlation Coefficient

Bangkok Chain  Chularat Hospital

Very weak diversification

The 3 months correlation between Bangkok and Chularat is 0.54. Overlapping area represents the amount of risk that can be diversified away by holding Bangkok Chain Hospital and Chularat Hospital Public in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Chularat Hospital Public and Bangkok Chain 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 Bangkok Chain Hospital are associated (or correlated) with Chularat Hospital. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Chularat Hospital Public has no effect on the direction of Bangkok Chain i.e., Bangkok Chain and Chularat Hospital go up and down completely randomly.

Pair Corralation between Bangkok Chain and Chularat Hospital

Assuming the 90 days trading horizon Bangkok Chain Hospital is expected to under-perform the Chularat Hospital. But the stock apears to be less risky and, when comparing its historical volatility, Bangkok Chain Hospital is 1.1 times less risky than Chularat Hospital. The stock trades about -0.02 of its potential returns per unit of risk. The Chularat Hospital Public is currently generating about -0.01 of returns per unit of risk over similar time horizon. If you would invest  270.00  in Chularat Hospital Public on September 13, 2024 and sell it today you would lose (6.00) from holding Chularat Hospital Public or give up 2.22% of portfolio value over 90 days.

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

Bangkok Chain Hospital  vs.  Chularat Hospital Public

Bangkok Chain Hospital

Risk-Adjusted Performance

0 of 100

Very Weak

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

Chularat Hospital Public

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Chularat Hospital Public has generated negative risk-adjusted returns adding no value to investors with long positions. Despite quite persistent technical and fundamental indicators, Chularat Hospital 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 Bangkok Chain and Chularat Hospital

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

The idea behind Bangkok Chain Hospital and Chularat Hospital 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.

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 Correlation Analysis module to reduce portfolio risk simply by holding instruments which are not perfectly correlated.