Correlation Between Airports and Thai Nam
Can any of the company-specific risk be diversified away by investing in both Airports and Thai Nam 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 Thai Nam 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 Thai Nam Plastic, you can compare the effects of market volatilities on Airports and Thai Nam 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 Thai Nam. Check out your portfolio center. Please also check ongoing floating volatility patterns of Airports and Thai Nam.
Diversification Opportunities for Airports and Thai Nam
Poor diversification
The 3 months correlation between Airports and Thai is 0.62. Overlapping area represents the amount of risk that can be diversified away by holding Airports of Thailand and Thai Nam Plastic in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Thai Nam Plastic 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 Thai Nam. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Thai Nam Plastic has no effect on the direction of Airports i.e., Airports and Thai Nam go up and down completely randomly.
Pair Corralation between Airports and Thai Nam
Assuming the 90 days trading horizon Airports of Thailand is expected to under-perform the Thai Nam. But the stock apears to be less risky and, when comparing its historical volatility, Airports of Thailand is 1.19 times less risky than Thai Nam. The stock trades about -0.25 of its potential returns per unit of risk. The Thai Nam Plastic is currently generating about -0.07 of returns per unit of risk over similar time horizon. If you would invest 92.00 in Thai Nam Plastic on December 4, 2024 and sell it today you would lose (12.00) from holding Thai Nam Plastic or give up 13.04% of portfolio value over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Significant |
Accuracy | 100.0% |
Values | Daily Returns |
Airports of Thailand vs. Thai Nam Plastic
Performance |
Timeline |
Airports of Thailand |
Thai Nam Plastic |
Airports and Thai Nam Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Airports and Thai Nam
The main advantage of trading using opposite Airports and Thai Nam positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Airports position performs unexpectedly, Thai Nam 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 Thai Nam will offset losses from the drop in Thai Nam's long position.Airports vs. CP ALL Public | Airports vs. PTT Public | Airports vs. Kasikornbank Public | Airports vs. Bangkok Dusit Medical |
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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 Sync Your Broker module to sync your existing holdings, watchlists, positions or portfolios from thousands of online brokerage services, banks, investment account aggregators and robo-advisors..
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