Correlation Between Communication System and Chularat Hospital

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

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

Diversification Opportunities for Communication System and Chularat Hospital

-0.08

Correlation Coefficient

Communication System  Chularat Hospital

Good diversification

The 3 months correlation between Communication and Chularat is -0.08. Overlapping area represents the amount of risk that can be diversified away by holding Communication System Solution and Chularat Hospital Public in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Chularat Hospital Public and Communication System 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 Communication System Solution are associated (or correlated) with Chularat Hospital. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Chularat Hospital Public has no effect on the direction of Communication System i.e., Communication System and Chularat Hospital go up and down completely randomly.

Pair Corralation between Communication System and Chularat Hospital

Assuming the 90 days trading horizon Communication System Solution is expected to generate 1.56 times more return on investment than Chularat Hospital. However, Communication System is 1.56 times more volatile than Chularat Hospital Public. It trades about 0.07 of its potential returns per unit of risk. Chularat Hospital Public is currently generating about 0.01 per unit of risk. If you would invest  88.00  in Communication System Solution on September 5, 2024 and sell it today you would earn a total of  9.00  from holding Communication System Solution or generate 10.23% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	98.41%
Values	Daily Returns

Communication System Solution  vs.  Chularat Hospital Public

Communication System

Risk-Adjusted Performance

5 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Communication System Solution are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. Despite quite conflicting basic indicators, Communication System may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Chularat Hospital Public

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Chularat Hospital Public has generated negative risk-adjusted returns adding no value to investors with long positions. Despite quite persistent technical and fundamental indicators, Chularat Hospital 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 Communication System and Chularat Hospital

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

The idea behind Communication System Solution and Chularat Hospital Public 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 Performance Analysis module to check effects of mean-variance optimization against your current asset allocation.