Correlation Between SIDETRADE and Bumrungrad Hospital

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

By analyzing existing cross correlation between SIDETRADE EO 1 and Bumrungrad Hospital Public, you can compare the effects of market volatilities on SIDETRADE 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 SIDETRADE with a short position of Bumrungrad Hospital. Check out your portfolio center. Please also check ongoing floating volatility patterns of SIDETRADE and Bumrungrad Hospital.

Diversification Opportunities for SIDETRADE and Bumrungrad Hospital

0.03

Correlation Coefficient

SIDETRADE  Bumrungrad Hospital

Significant diversification

The 3 months correlation between SIDETRADE and Bumrungrad is 0.03. Overlapping area represents the amount of risk that can be diversified away by holding SIDETRADE EO 1 and Bumrungrad Hospital Public in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Bumrungrad Hospital and SIDETRADE 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 SIDETRADE EO 1 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 SIDETRADE i.e., SIDETRADE and Bumrungrad Hospital go up and down completely randomly.

Pair Corralation between SIDETRADE and Bumrungrad Hospital

Assuming the 90 days horizon SIDETRADE EO 1 is expected to generate 0.72 times more return on investment than Bumrungrad Hospital. However, SIDETRADE EO 1 is 1.38 times less risky than Bumrungrad Hospital. It trades about -0.04 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  22,400  in SIDETRADE EO 1 on September 27, 2024 and sell it today you would lose (300.00) from holding SIDETRADE EO 1 or give up 1.34% of portfolio value over 90 days.

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

SIDETRADE EO 1  vs.  Bumrungrad Hospital Public

SIDETRADE EO 1

Risk-Adjusted Performance

0 of 100

Weak

Over the last 90 days SIDETRADE EO 1 has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable basic indicators, SIDETRADE is not utilizing all of its potentials. The newest stock price disturbance, may contribute to mid-run losses for the stockholders.

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 fragile performance in the last few months, the Stock's basic indicators remain nearly stable which may send shares a bit higher in January 2025. The current disturbance may also be a sign of long-run up-swing for the company stockholders.

Pair Trading with SIDETRADE and Bumrungrad Hospital

The main advantage of trading using opposite SIDETRADE and Bumrungrad Hospital positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if SIDETRADE 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 SIDETRADE EO 1 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.

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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.