Correlation Between Advanced Info and Airports

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

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

Diversification Opportunities for Advanced Info and Airports

0.09

Correlation Coefficient

Advanced Info  Airports

Significant diversification

The 3 months correlation between Advanced and Airports is 0.09. Overlapping area represents the amount of risk that can be diversified away by holding Advanced Info Service 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 Advanced Info 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 Advanced Info Service 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 Advanced Info i.e., Advanced Info and Airports go up and down completely randomly.

Pair Corralation between Advanced Info and Airports

Assuming the 90 days trading horizon Advanced Info Service is expected to generate 123.59 times more return on investment than Airports. However, Advanced Info is 123.59 times more volatile than Airports of Thailand. It trades about 0.12 of its potential returns per unit of risk. Airports of Thailand is currently generating about 0.03 per unit of risk. If you would invest  22,216  in Advanced Info Service on September 4, 2024 and sell it today you would earn a total of  6,684  from holding Advanced Info Service or generate 30.09% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	90.48%
Values	Daily Returns

Advanced Info Service  vs.  Airports of Thailand

Advanced Info Service

Risk-Adjusted Performance

0 of 100

OK

Over the last 90 days Advanced Info Service has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat conflicting basic indicators, Advanced Info sustained solid returns over the last few months and may actually be approaching a breakup point.

Airports of Thailand

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Airports of Thailand are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. Despite quite persistent basic indicators, Airports is not utilizing all of its potentials. The current stock price mess, may contribute to short-term losses for the institutional investors.

Pair Trading with Advanced Info and Airports

The main advantage of trading using opposite Advanced Info and Airports positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Advanced Info 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 Advanced Info Service 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 My Watchlist Analysis module to analyze my current watchlist and to refresh optimization strategy. Macroaxis watchlist is based on self-learning algorithm to remember stocks you like.