Correlation Between Asia Hotel and Bangkok Union

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

By analyzing existing cross correlation between Asia Hotel Public and Bangkok Union Insurance, you can compare the effects of market volatilities on Asia Hotel and Bangkok Union 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 Asia Hotel with a short position of Bangkok Union. Check out your portfolio center. Please also check ongoing floating volatility patterns of Asia Hotel and Bangkok Union.

Diversification Opportunities for Asia Hotel and Bangkok Union

-0.73

Correlation Coefficient

Asia Hotel  Bangkok Union

Pay attention - limited upside

The 3 months correlation between Asia and Bangkok is -0.73. Overlapping area represents the amount of risk that can be diversified away by holding Asia Hotel Public and Bangkok Union Insurance in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Bangkok Union Insurance and Asia Hotel 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 Asia Hotel Public are associated (or correlated) with Bangkok Union. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Bangkok Union Insurance has no effect on the direction of Asia Hotel i.e., Asia Hotel and Bangkok Union go up and down completely randomly.

Pair Corralation between Asia Hotel and Bangkok Union

Assuming the 90 days trading horizon Asia Hotel Public is expected to under-perform the Bangkok Union. In addition to that, Asia Hotel is 1.34 times more volatile than Bangkok Union Insurance. It trades about -0.18 of its total potential returns per unit of risk. Bangkok Union Insurance is currently generating about 0.34 per unit of volatility. If you would invest  1,580  in Bangkok Union Insurance on December 21, 2024 and sell it today you would earn a total of  500.00  from holding Bangkok Union Insurance or generate 31.65% return on investment over 90 days.

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

Asia Hotel Public  vs.  Bangkok Union Insurance

Asia Hotel Public

Risk-Adjusted Performance

Very Weak

Over the last 90 days Asia Hotel 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 forward-looking signals remain quite persistent which may send shares a bit higher in April 2025. The latest mess may also be a sign of long-standing up-swing for the company institutional investors.

Bangkok Union Insurance

Risk-Adjusted Performance

Strong

Compared to the overall equity markets, risk-adjusted returns on investments in Bangkok Union Insurance are ranked lower than 26 (%) of all global equities and portfolios over the last 90 days. Despite quite weak forward indicators, Bangkok Union disclosed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Asia Hotel and Bangkok Union

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

The idea behind Asia Hotel Public and Bangkok Union Insurance 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 Investing Opportunities module to build portfolios using our predefined set of ideas and optimize them against your investing preferences.