Correlation Between Airports and Airports

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

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

Diversification Opportunities for Airports and Airports

0.96

Correlation Coefficient

Airports  Airports

Almost no diversification

The 3 months correlation between Airports and Airports is 0.96. Overlapping area represents the amount of risk that can be diversified away by holding Airports of Thailand 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 Airports 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 Airports of Thailand 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 Airports i.e., Airports and Airports go up and down completely randomly.

Pair Corralation between Airports and Airports

Assuming the 90 days trading horizon Airports of Thailand is expected to generate 0.77 times more return on investment than Airports. However, Airports of Thailand is 1.3 times less risky than Airports. It trades about 0.09 of its potential returns per unit of risk. Airports of Thailand is currently generating about 0.06 per unit of risk. If you would invest  154.00  in Airports of Thailand on August 31, 2024 and sell it today you would earn a total of  10.00  from holding Airports of Thailand or generate 6.49% return on investment over 90 days.

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

Airports of Thailand  vs.  Airports of Thailand

Airports of Thailand

Risk-Adjusted Performance

6 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Airports of Thailand are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, Airports may actually be approaching a critical reversion point that can send shares even higher in December 2024.

Airports of Thailand

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Airports of Thailand are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. Despite nearly stable basic indicators, Airports is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with Airports and Airports

The main advantage of trading using opposite Airports and Airports positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Airports 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 Airports of Thailand 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 Price Exposure Probability module to analyze equity upside and downside potential for a given time horizon across multiple markets.