Correlation Between Minor International and Bangkok Dusit

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

By analyzing existing cross correlation between Minor International Public and Bangkok Dusit Medical, you can compare the effects of market volatilities on Minor International and Bangkok Dusit 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 Minor International with a short position of Bangkok Dusit. Check out your portfolio center. Please also check ongoing floating volatility patterns of Minor International and Bangkok Dusit.

Diversification Opportunities for Minor International and Bangkok Dusit

0.8

Correlation Coefficient

Minor International  Bangkok Dusit

Very poor diversification

The 3 months correlation between Minor and Bangkok is 0.8. Overlapping area represents the amount of risk that can be diversified away by holding Minor International Public and Bangkok Dusit Medical in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Bangkok Dusit Medical and Minor International 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 Minor International Public are associated (or correlated) with Bangkok Dusit. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Bangkok Dusit Medical has no effect on the direction of Minor International i.e., Minor International and Bangkok Dusit go up and down completely randomly.

Pair Corralation between Minor International and Bangkok Dusit

Assuming the 90 days trading horizon Minor International Public is expected to generate 1.02 times more return on investment than Bangkok Dusit. However, Minor International is 1.02 times more volatile than Bangkok Dusit Medical. It trades about 0.02 of its potential returns per unit of risk. Bangkok Dusit Medical is currently generating about -0.08 per unit of risk. If you would invest  2,675  in Minor International Public on September 4, 2024 and sell it today you would earn a total of  25.00  from holding Minor International Public or generate 0.93% return on investment over 90 days.

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

Minor International Public  vs.  Bangkok Dusit Medical

Minor International

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Minor International Public are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. Despite quite persistent forward-looking signals, Minor International is not utilizing all of its potentials. The latest stock price mess, may contribute to short-term losses for the institutional investors.

Bangkok Dusit Medical

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Bangkok Dusit Medical has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest weak performance, the Stock's forward-looking signals remain persistent and the latest mess on Wall Street may also be a sign of long-standing gains for the company institutional investors.

Pair Trading with Minor International and Bangkok Dusit

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

The idea behind Minor International Public and Bangkok Dusit Medical 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 Instant Ratings module to determine any equity ratings based on digital recommendations. Macroaxis instant equity ratings are based on combination of fundamental analysis and risk-adjusted market performance.