Correlation Between Bangkok Dusit and Srisawad Public

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

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

Diversification Opportunities for Bangkok Dusit and Srisawad Public

-0.01

Correlation Coefficient

Bangkok Dusit  Srisawad Public

Good diversification

The 3 months correlation between Bangkok and Srisawad is -0.01. Overlapping area represents the amount of risk that can be diversified away by holding Bangkok Dusit Medical and Srisawad Public in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Srisawad Public and Bangkok Dusit 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 Dusit Medical are associated (or correlated) with Srisawad Public. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Srisawad Public has no effect on the direction of Bangkok Dusit i.e., Bangkok Dusit and Srisawad Public go up and down completely randomly.

Pair Corralation between Bangkok Dusit and Srisawad Public

Assuming the 90 days trading horizon Bangkok Dusit is expected to generate 1.01 times less return on investment than Srisawad Public. In addition to that, Bangkok Dusit is 1.0 times more volatile than Srisawad Public. It trades about 0.11 of its total potential returns per unit of risk. Srisawad Public is currently generating about 0.11 per unit of volatility. If you would invest  4,378  in Srisawad Public on September 15, 2024 and sell it today you would lose (303.00) from holding Srisawad Public or give up 6.92% of portfolio value over 90 days.

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

Bangkok Dusit Medical  vs.  Srisawad Public

Bangkok Dusit Medical

Risk-Adjusted Performance

8 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Bangkok Dusit Medical are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. Despite somewhat conflicting primary indicators, Bangkok Dusit sustained solid returns over the last few months and may actually be approaching a breakup point.

Srisawad Public

Risk-Adjusted Performance

8 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Srisawad Public are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. Even with relatively weak basic indicators, Srisawad Public reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Bangkok Dusit and Srisawad Public

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

The idea behind Bangkok Dusit Medical and Srisawad 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.

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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 Pair Correlation module to compare performance and examine fundamental relationship between any two equity instruments.