Correlation Between Rajthanee Hospital and Sriracha Construction

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

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

Diversification Opportunities for Rajthanee Hospital and Sriracha Construction

0.27

Correlation Coefficient

Rajthanee Hospital  Sriracha Construction

Modest diversification

The 3 months correlation between Rajthanee and Sriracha is 0.27. Overlapping area represents the amount of risk that can be diversified away by holding Rajthanee Hospital Public and Sriracha Construction Public in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sriracha Construction and Rajthanee 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 Rajthanee Hospital Public are associated (or correlated) with Sriracha Construction. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Sriracha Construction has no effect on the direction of Rajthanee Hospital i.e., Rajthanee Hospital and Sriracha Construction go up and down completely randomly.

Pair Corralation between Rajthanee Hospital and Sriracha Construction

Assuming the 90 days trading horizon Rajthanee Hospital Public is expected to generate 0.84 times more return on investment than Sriracha Construction. However, Rajthanee Hospital Public is 1.19 times less risky than Sriracha Construction. It trades about -0.05 of its potential returns per unit of risk. Sriracha Construction Public is currently generating about -0.13 per unit of risk. If you would invest  2,290  in Rajthanee Hospital Public on September 13, 2024 and sell it today you would lose (150.00) from holding Rajthanee Hospital Public or give up 6.55% of portfolio value over 90 days.

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

Rajthanee Hospital Public  vs.  Sriracha Construction Public

Rajthanee Hospital Public

Risk-Adjusted Performance

0 of 100

Very Weak

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

Sriracha Construction

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Sriracha Construction Public has generated negative risk-adjusted returns adding no value to investors with long positions. Despite conflicting performance in the last few months, the Stock's forward indicators remain somewhat strong which may send shares a bit higher in January 2025. The current disturbance may also be a sign of long term up-swing for the company investors.

Pair Trading with Rajthanee Hospital and Sriracha Construction

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

The idea behind Rajthanee Hospital Public and Sriracha Construction 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.

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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 Price Transformation module to use Price Transformation models to analyze the depth of different equity instruments across global markets.