Correlation Between Bumrungrad Hospital and Columbia Sportswear

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

Diversification Opportunities for Bumrungrad Hospital and Columbia Sportswear

-0.88

Correlation Coefficient

Bumrungrad Hospital  Columbia Sportswear

Pay attention - limited upside

The 3 months correlation between Bumrungrad and Columbia is -0.88. Overlapping area represents the amount of risk that can be diversified away by holding Bumrungrad Hospital Public and Columbia Sportswear in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Columbia Sportswear 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 Columbia Sportswear. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Columbia Sportswear has no effect on the direction of Bumrungrad Hospital i.e., Bumrungrad Hospital and Columbia Sportswear go up and down completely randomly.

Pair Corralation between Bumrungrad Hospital and Columbia Sportswear

Assuming the 90 days trading horizon Bumrungrad Hospital Public is expected to generate 2.58 times more return on investment than Columbia Sportswear. However, Bumrungrad Hospital is 2.58 times more volatile than Columbia Sportswear. It trades about 0.06 of its potential returns per unit of risk. Columbia Sportswear is currently generating about 0.05 per unit of risk. If you would invest  410.00  in Bumrungrad Hospital Public on September 22, 2024 and sell it today you would earn a total of  115.00  from holding Bumrungrad Hospital Public or generate 28.05% return on investment over 90 days.

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

Bumrungrad Hospital Public  vs.  Columbia Sportswear

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.

Columbia Sportswear

Risk-Adjusted Performance

9 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Columbia Sportswear are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, Columbia Sportswear reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Bumrungrad Hospital and Columbia Sportswear

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

The idea behind Bumrungrad Hospital Public and Columbia Sportswear 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 Watchlist Optimization module to optimize watchlists to build efficient portfolios or rebalance existing positions based on the mean-variance optimization algorithm.