Correlation Between Bumrungrad Hospital and Bangkok Dusit

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

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

Diversification Opportunities for Bumrungrad Hospital and Bangkok Dusit

0.82

Correlation Coefficient

Bumrungrad Hospital  Bangkok Dusit

Very poor diversification

The 3 months correlation between Bumrungrad and Bangkok is 0.82. Overlapping area represents the amount of risk that can be diversified away by holding Bumrungrad Hospital Public 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 Bumrungrad Hospital 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 Bumrungrad Hospital Public 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 Bumrungrad Hospital i.e., Bumrungrad Hospital and Bangkok Dusit go up and down completely randomly.

Pair Corralation between Bumrungrad Hospital and Bangkok Dusit

Assuming the 90 days horizon Bumrungrad Hospital Public is expected to under-perform the Bangkok Dusit. In addition to that, Bumrungrad Hospital is 1.38 times more volatile than Bangkok Dusit Medical. It trades about -0.11 of its total potential returns per unit of risk. Bangkok Dusit Medical is currently generating about -0.08 per unit of volatility. If you would invest  2,742  in Bangkok Dusit Medical on September 3, 2024 and sell it today you would lose (217.00) from holding Bangkok Dusit Medical or give up 7.91% of portfolio value over 90 days.

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

Bumrungrad Hospital Public  vs.  Bangkok Dusit Medical

Bumrungrad Hospital

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Bumrungrad Hospital Public 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 fundamental drivers 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.

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 latest conflicting performance, the Stock's forward-looking signals remain persistent and the latest mess on Wall Street may also be a sign of long-standing gains for the company institutional investors.

Pair Trading with Bumrungrad Hospital and Bangkok Dusit

The main advantage of trading using opposite Bumrungrad Hospital and Bangkok Dusit positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Bumrungrad Hospital 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 Bumrungrad Hospital Public 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 Idea Optimizer module to use advanced portfolio builder with pre-computed micro ideas to build optimal portfolio .