Correlation Between Airports and SCB X

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

Diversification Opportunities for Airports and SCB X

-0.14

Correlation Coefficient

Airports  SCB X

Good diversification

The 3 months correlation between Airports and SCB is -0.14. Overlapping area represents the amount of risk that can be diversified away by holding Airports of Thailand and SCB X Public in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SCB X 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 SCB X. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of SCB X Public has no effect on the direction of Airports i.e., Airports and SCB X go up and down completely randomly.

Pair Corralation between Airports and SCB X

Assuming the 90 days trading horizon Airports of Thailand is expected to under-perform the SCB X. In addition to that, Airports is 2.1 times more volatile than SCB X Public. It trades about -0.03 of its total potential returns per unit of risk. SCB X Public is currently generating about 0.07 per unit of volatility. If you would invest  11,350  in SCB X Public on September 1, 2024 and sell it today you would earn a total of  100.00  from holding SCB X Public or generate 0.88% return on investment over 90 days.

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

Airports of Thailand  vs.  SCB X Public

Airports of Thailand

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Airports of Thailand are ranked lower than 1 (%) 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.

SCB X Public

Risk-Adjusted Performance

10 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in SCB X Public are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. Despite quite conflicting fundamental drivers, SCB X may actually be approaching a critical reversion point that can send shares even higher in December 2024.

Pair Trading with Airports and SCB X

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

The idea behind Airports of Thailand and SCB X 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.

Check out your portfolio center.

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.