Correlation Between Bangkok Dusit and AJ Advance

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

Diversification Opportunities for Bangkok Dusit and AJ Advance

0.6

Correlation Coefficient

Bangkok Dusit  AJ Advance

Poor diversification

The 3 months correlation between Bangkok and AJA is 0.6. Overlapping area represents the amount of risk that can be diversified away by holding Bangkok Dusit Medical and AJ Advance Technology in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on AJ Advance Technology 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 AJ Advance. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of AJ Advance Technology has no effect on the direction of Bangkok Dusit i.e., Bangkok Dusit and AJ Advance go up and down completely randomly.

Pair Corralation between Bangkok Dusit and AJ Advance

Assuming the 90 days trading horizon Bangkok Dusit Medical is expected to generate 0.35 times more return on investment than AJ Advance. However, Bangkok Dusit Medical is 2.84 times less risky than AJ Advance. It trades about -0.15 of its potential returns per unit of risk. AJ Advance Technology is currently generating about -0.15 per unit of risk. If you would invest  2,750  in Bangkok Dusit Medical on September 5, 2024 and sell it today you would lose (150.00) from holding Bangkok Dusit Medical or give up 5.45% of portfolio value over 90 days.

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

Bangkok Dusit Medical  vs.  AJ Advance Technology

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.

AJ Advance Technology

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days AJ Advance Technology has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest conflicting performance, the Stock's basic indicators 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 Dusit and AJ Advance

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

The idea behind Bangkok Dusit Medical and AJ Advance Technology 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 Portfolio Holdings module to check your current holdings and cash postion to detemine if your portfolio needs rebalancing.