Correlation Between Pentair Plc and Bumrungrad Hospital

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

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

Diversification Opportunities for Pentair Plc and Bumrungrad Hospital

-0.64

Correlation Coefficient

Pentair Plc  Bumrungrad Hospital

Excellent diversification

The 3 months correlation between Pentair and Bumrungrad is -0.64. Overlapping area represents the amount of risk that can be diversified away by holding Pentair plc and Bumrungrad Hospital Public in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Bumrungrad Hospital and Pentair Plc 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 Pentair plc 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 Pentair Plc i.e., Pentair Plc and Bumrungrad Hospital go up and down completely randomly.

Pair Corralation between Pentair Plc and Bumrungrad Hospital

Assuming the 90 days horizon Pentair plc is expected to generate 0.49 times more return on investment than Bumrungrad Hospital. However, Pentair plc is 2.03 times less risky than Bumrungrad Hospital. It trades about 0.32 of its potential returns per unit of risk. Bumrungrad Hospital Public is currently generating about -0.06 per unit of risk. If you would invest  7,980  in Pentair plc on September 3, 2024 and sell it today you would earn a total of  2,335  from holding Pentair plc or generate 29.26% return on investment over 90 days.

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

Pentair plc  vs.  Bumrungrad Hospital Public

Pentair plc

Risk-Adjusted Performance

25 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Pentair plc are ranked lower than 25 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, Pentair Plc reported solid returns over the last few months and may actually be approaching a breakup point.

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 latest fragile performance, the Stock's basic indicators remain stable and the current disturbance on Wall Street may also be a sign of long-run gains for the company stockholders.

Pair Trading with Pentair Plc and Bumrungrad Hospital

The main advantage of trading using opposite Pentair Plc and Bumrungrad Hospital positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Pentair Plc 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 Pentair plc 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.

Check out your portfolio center.

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 Bonds Directory module to find actively traded corporate debentures issued by US companies.