Correlation Between Quality Houses and Dusit Thani

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

By analyzing existing cross correlation between Quality Houses Property and Dusit Thani Freehold, you can compare the effects of market volatilities on Quality Houses and Dusit Thani 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 Quality Houses with a short position of Dusit Thani. Check out your portfolio center. Please also check ongoing floating volatility patterns of Quality Houses and Dusit Thani.

Diversification Opportunities for Quality Houses and Dusit Thani

0.3

Correlation Coefficient

Quality Houses  Dusit Thani

Weak diversification

The 3 months correlation between Quality and Dusit is 0.3. Overlapping area represents the amount of risk that can be diversified away by holding Quality Houses Property and Dusit Thani Freehold in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Dusit Thani Freehold and Quality Houses 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 Quality Houses Property are associated (or correlated) with Dusit Thani. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Dusit Thani Freehold has no effect on the direction of Quality Houses i.e., Quality Houses and Dusit Thani go up and down completely randomly.

Pair Corralation between Quality Houses and Dusit Thani

Assuming the 90 days trading horizon Quality Houses is expected to generate 78.17 times less return on investment than Dusit Thani. But when comparing it to its historical volatility, Quality Houses Property is 61.08 times less risky than Dusit Thani. It trades about 0.1 of its potential returns per unit of risk. Dusit Thani Freehold is currently generating about 0.13 of returns per unit of risk over similar time horizon. If you would invest  0.00  in Dusit Thani Freehold on September 3, 2024 and sell it today you would earn a total of  496.00  from holding Dusit Thani Freehold or generate 9.223372036854776E16% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	98.41%
Values	Daily Returns

Quality Houses Property  vs.  Dusit Thani Freehold

Quality Houses Property

Risk-Adjusted Performance

7 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Quality Houses Property are ranked lower than 7 (%) of all funds and portfolios of funds over the last 90 days. Despite quite conflicting forward-looking signals, Quality Houses disclosed solid returns over the last few months and may actually be approaching a breakup point.

Dusit Thani Freehold

Risk-Adjusted Performance

9 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Dusit Thani Freehold are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. Despite somewhat conflicting fundamental drivers, Dusit Thani sustained solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Quality Houses and Dusit Thani

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

The idea behind Quality Houses Property and Dusit Thani Freehold 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 Rebalancing module to analyze risk-adjusted returns against different time horizons to find asset-allocation targets.