Correlation Between Bangkok Chain and Bangkok Dusit

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

By analyzing existing cross correlation between Bangkok Chain Hospital and Bangkok Dusit Medical, you can compare the effects of market volatilities on Bangkok Chain and Bangkok Dusit 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 Bangkok Chain with a short position of Bangkok Dusit. Check out your portfolio center. Please also check ongoing floating volatility patterns of Bangkok Chain and Bangkok Dusit.

Diversification Opportunities for Bangkok Chain and Bangkok Dusit

0.63

Correlation Coefficient

Bangkok Chain  Bangkok Dusit

Poor diversification

The 3 months correlation between Bangkok and Bangkok is 0.63. Overlapping area represents the amount of risk that can be diversified away by holding Bangkok Chain Hospital and Bangkok Dusit Medical in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Bangkok Dusit Medical and Bangkok Chain 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 Bangkok Chain Hospital are associated (or correlated) with Bangkok Dusit. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Bangkok Dusit Medical has no effect on the direction of Bangkok Chain i.e., Bangkok Chain and Bangkok Dusit go up and down completely randomly.

Pair Corralation between Bangkok Chain and Bangkok Dusit

Assuming the 90 days trading horizon Bangkok Chain Hospital is expected to under-perform the Bangkok Dusit. But the stock apears to be less risky and, when comparing its historical volatility, Bangkok Chain Hospital is 1.04 times less risky than Bangkok Dusit. The stock trades about -0.09 of its potential returns per unit of risk. The Bangkok Dusit Medical is currently generating about -0.08 of returns per unit of risk over similar time horizon. If you would invest  2,413  in Bangkok Dusit Medical on December 29, 2024 and sell it today you would lose (193.00) from holding Bangkok Dusit Medical or give up 8.0% of portfolio value over 90 days.

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

Bangkok Chain Hospital  vs.  Bangkok Dusit Medical

Bangkok Chain Hospital

Risk-Adjusted Performance

Very Weak

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

Bangkok Dusit Medical

Risk-Adjusted Performance

Very Weak

Over the last 90 days Bangkok Dusit Medical has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest conflicting performance, the Stock's forward-looking signals remain persistent and the latest mess on Wall Street may also be a sign of long-standing gains for the company institutional investors.

Pair Trading with Bangkok Chain and Bangkok Dusit

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

The idea behind Bangkok Chain Hospital and Bangkok Dusit Medical 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 Economic Indicators module to top statistical indicators that provide insights into how an economy is performing.