Correlation Between Bangkok Dusit and Life Healthcare

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

Diversification Opportunities for Bangkok Dusit and Life Healthcare

0.04

Correlation Coefficient

Bangkok Dusit  Life Healthcare

Significant diversification

The 3 months correlation between Bangkok and Life is 0.04. Overlapping area represents the amount of risk that can be diversified away by holding Bangkok Dusit Medical and Life Healthcare Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Life Healthcare Group 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 Life Healthcare. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Life Healthcare Group has no effect on the direction of Bangkok Dusit i.e., Bangkok Dusit and Life Healthcare go up and down completely randomly.

Pair Corralation between Bangkok Dusit and Life Healthcare

If you would invest  73.00  in Bangkok Dusit Medical on September 24, 2024 and sell it today you would earn a total of  0.00  from holding Bangkok Dusit Medical or generate 0.0% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	5.0%
Values	Daily Returns

Bangkok Dusit Medical  vs.  Life Healthcare Group

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 nearly stable essential indicators, Bangkok Dusit is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

Life Healthcare Group

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Life Healthcare Group has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly strong technical indicators, Life Healthcare is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Bangkok Dusit and Life Healthcare

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

The idea behind Bangkok Dusit Medical and Life Healthcare Group 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 Portfolio Holdings module to check your current holdings and cash postion to detemine if your portfolio needs rebalancing.