Correlation Between Muang Thai and Bumrungrad Hospital

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

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

Diversification Opportunities for Muang Thai and Bumrungrad Hospital

0.6

Correlation Coefficient

Muang Thai  Bumrungrad Hospital

Poor diversification

The 3 months correlation between Muang and Bumrungrad is 0.6. Overlapping area represents the amount of risk that can be diversified away by holding Muang Thai Insurance and Bumrungrad Hospital Public in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Bumrungrad Hospital and Muang Thai 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 Muang Thai Insurance are associated (or correlated) with Bumrungrad Hospital. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Bumrungrad Hospital has no effect on the direction of Muang Thai i.e., Muang Thai and Bumrungrad Hospital go up and down completely randomly.

Pair Corralation between Muang Thai and Bumrungrad Hospital

Assuming the 90 days trading horizon Muang Thai Insurance is expected to generate 0.51 times more return on investment than Bumrungrad Hospital. However, Muang Thai Insurance is 1.96 times less risky than Bumrungrad Hospital. It trades about -0.03 of its potential returns per unit of risk. Bumrungrad Hospital Public is currently generating about -0.27 per unit of risk. If you would invest  10,800  in Muang Thai Insurance on September 13, 2024 and sell it today you would lose (200.00) from holding Muang Thai Insurance or give up 1.85% of portfolio value over 90 days.

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

Muang Thai Insurance  vs.  Bumrungrad Hospital Public

Muang Thai Insurance

Risk-Adjusted Performance

0 of 100

Very Weak

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

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 conflicting performance in the last few months, the Stock's fundamental drivers remain quite persistent which may send shares a bit higher in January 2025. The latest mess may also be a sign of long-standing up-swing for the company institutional investors.

Pair Trading with Muang Thai and Bumrungrad Hospital

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

The idea behind Muang Thai Insurance and Bumrungrad 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.

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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.