Correlation Between Nonthavej Hospital and Bangkok Chain

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

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

Diversification Opportunities for Nonthavej Hospital and Bangkok Chain

0.18

Correlation Coefficient

Nonthavej Hospital  Bangkok Chain

Average diversification

The 3 months correlation between Nonthavej and Bangkok is 0.18. Overlapping area represents the amount of risk that can be diversified away by holding Nonthavej Hospital Public and Bangkok Chain Hospital in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Bangkok Chain Hospital and Nonthavej Hospital 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 Nonthavej Hospital Public are associated (or correlated) with Bangkok Chain. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Bangkok Chain Hospital has no effect on the direction of Nonthavej Hospital i.e., Nonthavej Hospital and Bangkok Chain go up and down completely randomly.

Pair Corralation between Nonthavej Hospital and Bangkok Chain

Assuming the 90 days trading horizon Nonthavej Hospital Public is expected to under-perform the Bangkok Chain. But the stock apears to be less risky and, when comparing its historical volatility, Nonthavej Hospital Public is 164.06 times less risky than Bangkok Chain. The stock trades about -0.08 of its potential returns per unit of risk. The Bangkok Chain Hospital is currently generating about 0.11 of returns per unit of risk over similar time horizon. If you would invest  1,773  in Bangkok Chain Hospital on September 27, 2024 and sell it today you would lose (243.00) from holding Bangkok Chain Hospital or give up 13.71% of portfolio value over 90 days.

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

Nonthavej Hospital Public  vs.  Bangkok Chain Hospital

Nonthavej Hospital Public

Risk-Adjusted Performance

0 of 100

Very Weak

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

Bangkok Chain Hospital

Risk-Adjusted Performance

8 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Bangkok Chain Hospital are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. Despite somewhat conflicting fundamental drivers, Bangkok Chain sustained solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Nonthavej Hospital and Bangkok Chain

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

The idea behind Nonthavej Hospital Public and Bangkok Chain Hospital 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.