Correlation Between Airports and CHUWIT FARM

Can any of the company-specific risk be diversified away by investing in both Airports and CHUWIT FARM 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 CHUWIT FARM 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 CHUWIT FARM PUBLIC, you can compare the effects of market volatilities on Airports and CHUWIT FARM 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 CHUWIT FARM. Check out your portfolio center. Please also check ongoing floating volatility patterns of Airports and CHUWIT FARM.

Diversification Opportunities for Airports and CHUWIT FARM

0.71

Correlation Coefficient

Airports  CHUWIT FARM

Poor diversification

The 3 months correlation between Airports and CHUWIT is 0.71. Overlapping area represents the amount of risk that can be diversified away by holding Airports of Thailand and CHUWIT FARM PUBLIC in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on CHUWIT FARM PUBLIC 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 CHUWIT FARM. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of CHUWIT FARM PUBLIC has no effect on the direction of Airports i.e., Airports and CHUWIT FARM go up and down completely randomly.

Pair Corralation between Airports and CHUWIT FARM

Assuming the 90 days trading horizon Airports of Thailand is expected to generate 0.43 times more return on investment than CHUWIT FARM. However, Airports of Thailand is 2.32 times less risky than CHUWIT FARM. It trades about 0.01 of its potential returns per unit of risk. CHUWIT FARM PUBLIC is currently generating about -0.22 per unit of risk. If you would invest  5,677  in Airports of Thailand on October 22, 2024 and sell it today you would earn a total of  48.00  from holding Airports of Thailand or generate 0.85% return on investment over 90 days.

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

Airports of Thailand  vs.  CHUWIT FARM PUBLIC

Airports of Thailand

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Airports of Thailand has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest weak performance, the Stock's basic indicators remain persistent and the latest mess on Wall Street may also be a sign of long-standing gains for the company institutional investors.

CHUWIT FARM PUBLIC

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days CHUWIT FARM PUBLIC has generated negative risk-adjusted returns adding no value to investors with long positions. Despite conflicting performance in the last few months, the Stock's fundamental drivers remain somewhat strong which may send shares a bit higher in February 2025. The current disturbance may also be a sign of long term up-swing for the company investors.

Pair Trading with Airports and CHUWIT FARM

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

The idea behind Airports of Thailand and CHUWIT FARM 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 Premium Stories module to follow Macroaxis premium stories from verified contributors across different equity types, categories and coverage scope.