Correlation Between Property Perfect and Airports

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

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

Diversification Opportunities for Property Perfect and Airports

0.62

Correlation Coefficient

Property Perfect  Airports

Poor diversification

The 3 months correlation between Property and Airports is 0.62. Overlapping area represents the amount of risk that can be diversified away by holding Property Perfect Public and Airports of Thailand in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Airports of Thailand and Property Perfect 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 Property Perfect Public are associated (or correlated) with Airports. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Airports of Thailand has no effect on the direction of Property Perfect i.e., Property Perfect and Airports go up and down completely randomly.

Pair Corralation between Property Perfect and Airports

Assuming the 90 days horizon Property Perfect is expected to generate 2.32 times less return on investment than Airports. In addition to that, Property Perfect is 4.43 times more volatile than Airports of Thailand. It trades about 0.0 of its total potential returns per unit of risk. Airports of Thailand is currently generating about 0.01 per unit of volatility. If you would invest  6,146  in Airports of Thailand on September 13, 2024 and sell it today you would earn a total of  4.00  from holding Airports of Thailand or generate 0.07% return on investment over 90 days.

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

Property Perfect Public  vs.  Airports of Thailand

Property Perfect Public

Risk-Adjusted Performance

0 of 100

Very Weak

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

Airports of Thailand

Risk-Adjusted Performance

0 of 100

Very Weak

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

Pair Trading with Property Perfect and Airports

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

The idea behind Property Perfect Public and Airports of Thailand 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 Optimization module to compute new portfolio that will generate highest expected return given your specified tolerance for risk.