Correlation Between Nasdaq and Banpu PCL

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

By analyzing existing cross correlation between Nasdaq Inc and Banpu PCL, you can compare the effects of market volatilities on Nasdaq and Banpu PCL 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 Nasdaq with a short position of Banpu PCL. Check out your portfolio center. Please also check ongoing floating volatility patterns of Nasdaq and Banpu PCL.

Diversification Opportunities for Nasdaq and Banpu PCL

-0.78

Correlation Coefficient

Nasdaq  Banpu PCL

Pay attention - limited upside

The 3 months correlation between Nasdaq and Banpu is -0.78. Overlapping area represents the amount of risk that can be diversified away by holding Nasdaq Inc and Banpu PCL in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Banpu PCL and Nasdaq 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 Nasdaq Inc are associated (or correlated) with Banpu PCL. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Banpu PCL has no effect on the direction of Nasdaq i.e., Nasdaq and Banpu PCL go up and down completely randomly.

Pair Corralation between Nasdaq and Banpu PCL

Given the investment horizon of 90 days Nasdaq Inc is expected to generate 0.21 times more return on investment than Banpu PCL. However, Nasdaq Inc is 4.84 times less risky than Banpu PCL. It trades about 0.09 of its potential returns per unit of risk. Banpu PCL is currently generating about -0.05 per unit of risk. If you would invest  7,345  in Nasdaq Inc on September 24, 2024 and sell it today you would earn a total of  425.00  from holding Nasdaq Inc or generate 5.79% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Weak
Accuracy	98.46%
Values	Daily Returns

Nasdaq Inc  vs.  Banpu PCL

Nasdaq Inc

Risk-Adjusted Performance

7 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Nasdaq Inc are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. Even with relatively invariable basic indicators, Nasdaq is not utilizing all of its potentials. The latest stock price agitation, may contribute to short-term losses for the retail investors.

Banpu PCL

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Banpu PCL has generated negative risk-adjusted returns adding no value to investors with long positions. Despite fragile performance in the last few months, the Stock's basic indicators remain nearly stable which may send shares a bit higher in January 2025. The current disturbance may also be a sign of long-run up-swing for the company stockholders.

Pair Trading with Nasdaq and Banpu PCL

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

The idea behind Nasdaq Inc and Banpu PCL 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 Insider Screener module to find insiders across different sectors to evaluate their impact on performance.