Correlation Between Bangkok Dusit and Asia Aviation

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

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

Diversification Opportunities for Bangkok Dusit and Asia Aviation

-0.12

Correlation Coefficient

Bangkok Dusit  Asia Aviation

Good diversification

The 3 months correlation between Bangkok and Asia is -0.12. Overlapping area represents the amount of risk that can be diversified away by holding Bangkok Dusit Medical and Asia Aviation Public in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Asia Aviation Public and Bangkok Dusit 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 Dusit Medical are associated (or correlated) with Asia Aviation. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Asia Aviation Public has no effect on the direction of Bangkok Dusit i.e., Bangkok Dusit and Asia Aviation go up and down completely randomly.

Pair Corralation between Bangkok Dusit and Asia Aviation

Assuming the 90 days trading horizon Bangkok Dusit Medical is expected to under-perform the Asia Aviation. But the stock apears to be less risky and, when comparing its historical volatility, Bangkok Dusit Medical is 85.53 times less risky than Asia Aviation. The stock trades about -0.08 of its potential returns per unit of risk. The Asia Aviation Public is currently generating about 0.13 of returns per unit of risk over similar time horizon. If you would invest  0.00  in Asia Aviation Public on September 3, 2024 and sell it today you would earn a total of  282.00  from holding Asia Aviation Public or generate 9.223372036854776E16% return on investment over 90 days.

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

Bangkok Dusit Medical  vs.  Asia Aviation Public

Bangkok Dusit Medical

Risk-Adjusted Performance

0 of 100

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.

Asia Aviation Public

Risk-Adjusted Performance

10 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Asia Aviation Public are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. Despite quite conflicting basic indicators, Asia Aviation disclosed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Bangkok Dusit and Asia Aviation

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

The idea behind Bangkok Dusit Medical and Asia Aviation 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 Global Correlations module to find global opportunities by holding instruments from different markets.