Correlation Between Thonburi Medical and Major Cineplex

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

By analyzing existing cross correlation between Thonburi Medical Centre and Major Cineplex Group, you can compare the effects of market volatilities on Thonburi Medical and Major Cineplex 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 Thonburi Medical with a short position of Major Cineplex. Check out your portfolio center. Please also check ongoing floating volatility patterns of Thonburi Medical and Major Cineplex.

Diversification Opportunities for Thonburi Medical and Major Cineplex

-0.01

Correlation Coefficient

Thonburi Medical  Major Cineplex

Good diversification

The 3 months correlation between Thonburi and Major is -0.01. Overlapping area represents the amount of risk that can be diversified away by holding Thonburi Medical Centre and Major Cineplex Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Major Cineplex Group and Thonburi Medical 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 Thonburi Medical Centre are associated (or correlated) with Major Cineplex. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Major Cineplex Group has no effect on the direction of Thonburi Medical i.e., Thonburi Medical and Major Cineplex go up and down completely randomly.

Pair Corralation between Thonburi Medical and Major Cineplex

Assuming the 90 days trading horizon Thonburi Medical is expected to generate 194.12 times less return on investment than Major Cineplex. But when comparing it to its historical volatility, Thonburi Medical Centre is 135.72 times less risky than Major Cineplex. It trades about 0.08 of its potential returns per unit of risk. Major Cineplex Group is currently generating about 0.11 of returns per unit of risk over similar time horizon. If you would invest  1,450  in Major Cineplex Group on September 5, 2024 and sell it today you would earn a total of  0.00  from holding Major Cineplex Group or generate 0.0% return on investment over 90 days.

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

Thonburi Medical Centre  vs.  Major Cineplex Group

Thonburi Medical Centre

Risk-Adjusted Performance

6 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Thonburi Medical Centre are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. Despite quite persistent technical indicators, Thonburi Medical is not utilizing all of its potentials. The latest stock price mess, may contribute to short-term losses for the institutional investors.

Major Cineplex Group

Risk-Adjusted Performance

8 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Major Cineplex Group are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. Even with relatively unsteady basic indicators, Major Cineplex reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Thonburi Medical and Major Cineplex

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

The idea behind Thonburi Medical Centre and Major Cineplex 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 Portfolio Comparator module to compare the composition, asset allocations and performance of any two portfolios in your account.