Correlation Between Bumrungrad Hospital and Scandinavian Tobacco

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

Diversification Opportunities for Bumrungrad Hospital and Scandinavian Tobacco

0.86

Correlation Coefficient

Bumrungrad Hospital  Scandinavian Tobacco

Very poor diversification

The 3 months correlation between Bumrungrad and Scandinavian is 0.86. Overlapping area represents the amount of risk that can be diversified away by holding Bumrungrad Hospital Public and Scandinavian Tobacco Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Scandinavian Tobacco 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 Scandinavian Tobacco. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Scandinavian Tobacco has no effect on the direction of Bumrungrad Hospital i.e., Bumrungrad Hospital and Scandinavian Tobacco go up and down completely randomly.

Pair Corralation between Bumrungrad Hospital and Scandinavian Tobacco

Assuming the 90 days trading horizon Bumrungrad Hospital Public is expected to under-perform the Scandinavian Tobacco. In addition to that, Bumrungrad Hospital is 1.06 times more volatile than Scandinavian Tobacco Group. It trades about -0.08 of its total potential returns per unit of risk. Scandinavian Tobacco Group is currently generating about 0.05 per unit of volatility. If you would invest  1,246  in Scandinavian Tobacco Group on September 15, 2024 and sell it today you would earn a total of  22.00  from holding Scandinavian Tobacco Group or generate 1.77% return on investment over 90 days.

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

Bumrungrad Hospital Public  vs.  Scandinavian Tobacco Group

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 fragile performance in the last few months, the Stock's basic indicators remain nearly stable which may send shares a bit higher in January 2025. The current disturbance may also be a sign of long-run up-swing for the company stockholders.

Scandinavian Tobacco

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Scandinavian Tobacco Group has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest fragile performance, the Stock's basic indicators remain stable and the current disturbance on Wall Street may also be a sign of long-run gains for the company stockholders.

Pair Trading with Bumrungrad Hospital and Scandinavian Tobacco

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

The idea behind Bumrungrad Hospital Public and Scandinavian Tobacco 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.

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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.