Correlation Between BTS Group and Bangkok Chain

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

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

Diversification Opportunities for BTS Group and Bangkok Chain

-0.47

Correlation Coefficient

BTS Group  Bangkok Chain

Very good diversification

The 3 months correlation between BTS and Bangkok is -0.47. Overlapping area represents the amount of risk that can be diversified away by holding BTS Group Holdings and Bangkok Chain Hospital in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Bangkok Chain Hospital and BTS Group 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 BTS Group Holdings are associated (or correlated) with Bangkok Chain. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Bangkok Chain Hospital has no effect on the direction of BTS Group i.e., BTS Group and Bangkok Chain go up and down completely randomly.

Pair Corralation between BTS Group and Bangkok Chain

Assuming the 90 days trading horizon BTS Group Holdings is expected to generate 1.34 times more return on investment than Bangkok Chain. However, BTS Group is 1.34 times more volatile than Bangkok Chain Hospital. It trades about 0.54 of its potential returns per unit of risk. Bangkok Chain Hospital is currently generating about 0.05 per unit of risk. If you would invest  490.00  in BTS Group Holdings on September 15, 2024 and sell it today you would earn a total of  100.00  from holding BTS Group Holdings or generate 20.41% return on investment over 90 days.

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

BTS Group Holdings  vs.  Bangkok Chain Hospital

BTS Group Holdings

Risk-Adjusted Performance

16 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in BTS Group Holdings are ranked lower than 16 (%) of all global equities and portfolios over the last 90 days. Despite quite conflicting basic indicators, BTS Group disclosed solid returns over the last few months and may actually be approaching a breakup point.

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.

Pair Trading with BTS Group and Bangkok Chain

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

The idea behind BTS Group Holdings and Bangkok Chain Hospital 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 Fundamental Analysis module to view fundamental data based on most recent published financial statements.