Correlation Between Airports and NForce Secure

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

Diversification Opportunities for Airports and NForce Secure

0.57

Correlation Coefficient

Airports  NForce Secure

Very weak diversification

The 3 months correlation between Airports and NForce is 0.57. Overlapping area represents the amount of risk that can be diversified away by holding Airports of Thailand and nForce Secure Public in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on nForce Secure 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 NForce Secure. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of nForce Secure Public has no effect on the direction of Airports i.e., Airports and NForce Secure go up and down completely randomly.

Pair Corralation between Airports and NForce Secure

Assuming the 90 days trading horizon Airports of Thailand is expected to under-perform the NForce Secure. But the stock apears to be less risky and, when comparing its historical volatility, Airports of Thailand is 2.42 times less risky than NForce Secure. The stock trades about -0.03 of its potential returns per unit of risk. The nForce Secure Public is currently generating about 0.0 of returns per unit of risk over similar time horizon. If you would invest  1,371  in nForce Secure Public on September 25, 2024 and sell it today you would lose (161.00) from holding nForce Secure Public or give up 11.74% of portfolio value over 90 days.

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

Airports of Thailand  vs.  nForce Secure 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 quite persistent basic indicators, Airports is not utilizing all of its potentials. The latest stock price mess, may contribute to short-term losses for the institutional investors.

nForce Secure Public

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days nForce Secure Public has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest weak performance, the Stock's fundamental indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for the company investors.

Pair Trading with Airports and NForce Secure

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

The idea behind Airports of Thailand and nForce Secure 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 Performance Analysis module to check effects of mean-variance optimization against your current asset allocation.