Correlation Between Vibhavadi Medical and Bangkok Dusit

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

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

Diversification Opportunities for Vibhavadi Medical and Bangkok Dusit

0.21

Correlation Coefficient

Vibhavadi Medical  Bangkok Dusit

Modest diversification

The 3 months correlation between Vibhavadi and Bangkok is 0.21. Overlapping area represents the amount of risk that can be diversified away by holding Vibhavadi Medical Center and Bangkok Dusit Medical in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Bangkok Dusit Medical and Vibhavadi Medical 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 Vibhavadi Medical Center are associated (or correlated) with Bangkok Dusit. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Bangkok Dusit Medical has no effect on the direction of Vibhavadi Medical i.e., Vibhavadi Medical and Bangkok Dusit go up and down completely randomly.

Pair Corralation between Vibhavadi Medical and Bangkok Dusit

Assuming the 90 days trading horizon Vibhavadi Medical Center is expected to generate 85.55 times more return on investment than Bangkok Dusit. However, Vibhavadi Medical is 85.55 times more volatile than Bangkok Dusit Medical. It trades about 0.13 of its potential returns per unit of risk. Bangkok Dusit Medical is currently generating about -0.08 per unit of risk. If you would invest  0.00  in Vibhavadi Medical Center on September 3, 2024 and sell it today you would earn a total of  204.00  from holding Vibhavadi Medical Center or generate 9.223372036854776E16% return on investment over 90 days.

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

Vibhavadi Medical Center  vs.  Bangkok Dusit Medical

Vibhavadi Medical Center

Risk-Adjusted Performance

9 of 100

OK

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

Bangkok Dusit Medical

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Bangkok Dusit Medical has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest conflicting performance, the Stock's forward-looking signals remain persistent and the latest mess on Wall Street may also be a sign of long-standing gains for the company institutional investors.

Pair Trading with Vibhavadi Medical and Bangkok Dusit

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

The idea behind Vibhavadi Medical Center and Bangkok Dusit Medical 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 Equity Analysis module to research over 250,000 global equities including funds, stocks and ETFs to find investment opportunities.