Correlation Between Kingsmen CMTI and Airports

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

By analyzing existing cross correlation between Kingsmen CMTI Public and Airports of Thailand, you can compare the effects of market volatilities on Kingsmen CMTI and Airports 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 Kingsmen CMTI with a short position of Airports. Check out your portfolio center. Please also check ongoing floating volatility patterns of Kingsmen CMTI and Airports.

Diversification Opportunities for Kingsmen CMTI and Airports

0.59

Correlation Coefficient

Kingsmen CMTI  Airports

Very weak diversification

The 3 months correlation between Kingsmen and Airports is 0.59. Overlapping area represents the amount of risk that can be diversified away by holding Kingsmen CMTI Public and Airports of Thailand in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Airports of Thailand and Kingsmen CMTI 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 Kingsmen CMTI Public are associated (or correlated) with Airports. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Airports of Thailand has no effect on the direction of Kingsmen CMTI i.e., Kingsmen CMTI and Airports go up and down completely randomly.

Pair Corralation between Kingsmen CMTI and Airports

Given the investment horizon of 90 days Kingsmen CMTI Public is expected to generate 51.82 times more return on investment than Airports. However, Kingsmen CMTI is 51.82 times more volatile than Airports of Thailand. It trades about 0.06 of its potential returns per unit of risk. Airports of Thailand is currently generating about -0.03 per unit of risk. If you would invest  97.00  in Kingsmen CMTI Public on September 14, 2024 and sell it today you would earn a total of  22.00  from holding Kingsmen CMTI Public or generate 22.68% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	99.62%
Values	Daily Returns

Kingsmen CMTI Public  vs.  Airports of Thailand

Kingsmen CMTI Public

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Kingsmen CMTI Public has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest conflicting performance, the Stock's fundamental drivers remain persistent and the latest mess on Wall Street may also be a sign of long-standing gains for the company institutional investors.

Airports of Thailand

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Airports of Thailand has generated negative risk-adjusted returns adding no value to investors with long positions. Despite quite persistent basic indicators, Airports is not utilizing all of its potentials. The current stock price mess, may contribute to short-term losses for the institutional investors.

Pair Trading with Kingsmen CMTI and Airports

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

The idea behind Kingsmen CMTI Public and Airports of Thailand 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 Aroon Oscillator module to analyze current equity momentum using Aroon Oscillator and other momentum ratios.