Correlation Between BJs Wholesale and Bumrungrad Hospital

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

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

Diversification Opportunities for BJs Wholesale and Bumrungrad Hospital

-0.63

Correlation Coefficient

BJs Wholesale  Bumrungrad Hospital

Excellent diversification

The 3 months correlation between BJs and Bumrungrad is -0.63. Overlapping area represents the amount of risk that can be diversified away by holding BJs Wholesale Club and Bumrungrad Hospital Public in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Bumrungrad Hospital and BJs Wholesale 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 BJs Wholesale Club 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 BJs Wholesale i.e., BJs Wholesale and Bumrungrad Hospital go up and down completely randomly.

Pair Corralation between BJs Wholesale and Bumrungrad Hospital

Assuming the 90 days horizon BJs Wholesale Club is expected to generate 0.58 times more return on investment than Bumrungrad Hospital. However, BJs Wholesale Club is 1.73 times less risky than Bumrungrad Hospital. It trades about 0.06 of its potential returns per unit of risk. Bumrungrad Hospital Public is currently generating about -0.02 per unit of risk. If you would invest  8,950  in BJs Wholesale Club on December 5, 2024 and sell it today you would earn a total of  450.00  from holding BJs Wholesale Club or generate 5.03% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Weak
Accuracy	98.33%
Values	Daily Returns

BJs Wholesale Club  vs.  Bumrungrad Hospital Public

BJs Wholesale Club

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in BJs Wholesale Club are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. Despite nearly stable basic indicators, BJs Wholesale 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

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 nearly stable basic indicators, Bumrungrad Hospital is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with BJs Wholesale and Bumrungrad Hospital

The main advantage of trading using opposite BJs Wholesale and Bumrungrad Hospital positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if BJs Wholesale 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 BJs Wholesale Club 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 Idea Optimizer module to use advanced portfolio builder with pre-computed micro ideas to build optimal portfolio .