Correlation Between Bangkok Chain and Wattana Karnpaet

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

Diversification Opportunities for Bangkok Chain and Wattana Karnpaet

-0.25

Correlation Coefficient

Bangkok Chain  Wattana Karnpaet

Very good diversification

The 3 months correlation between Bangkok and Wattana is -0.25. Overlapping area represents the amount of risk that can be diversified away by holding Bangkok Chain Hospital and Wattana Karnpaet Public in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Wattana Karnpaet Public 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 Wattana Karnpaet. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Wattana Karnpaet Public has no effect on the direction of Bangkok Chain i.e., Bangkok Chain and Wattana Karnpaet go up and down completely randomly.

Pair Corralation between Bangkok Chain and Wattana Karnpaet

Assuming the 90 days trading horizon Bangkok Chain Hospital is expected to under-perform the Wattana Karnpaet. But the stock apears to be less risky and, when comparing its historical volatility, Bangkok Chain Hospital is 3.0 times less risky than Wattana Karnpaet. The stock trades about -0.03 of its potential returns per unit of risk. The Wattana Karnpaet Public is currently generating about 0.03 of returns per unit of risk over similar time horizon. If you would invest  8,372  in Wattana Karnpaet Public on October 7, 2024 and sell it today you would earn a total of  2,528  from holding Wattana Karnpaet Public or generate 30.2% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	99.58%
Values	Daily Returns

Bangkok Chain Hospital  vs.  Wattana Karnpaet Public

Bangkok Chain Hospital

Risk-Adjusted Performance

0 of 100

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 conflicting performance in the last few months, the Stock's technical indicators remain quite persistent which may send shares a bit higher in February 2025. The latest mess may also be a sign of long-standing up-swing for the company institutional investors.

Wattana Karnpaet Public

Risk-Adjusted Performance

14 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Wattana Karnpaet Public are ranked lower than 14 (%) of all global equities and portfolios over the last 90 days. Despite quite conflicting basic indicators, Wattana Karnpaet disclosed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Bangkok Chain and Wattana Karnpaet

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

The idea behind Bangkok Chain Hospital and Wattana Karnpaet 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.

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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.