Correlation Between Bangkok Dusit and Chularat Hospital

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

Diversification Opportunities for Bangkok Dusit and Chularat Hospital

0.22

Correlation Coefficient

Bangkok Dusit  Chularat Hospital

Modest diversification

The 3 months correlation between Bangkok and Chularat is 0.22. Overlapping area represents the amount of risk that can be diversified away by holding Bangkok Dusit Medical and Chularat Hospital Public in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Chularat Hospital 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 Chularat Hospital. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Chularat Hospital Public has no effect on the direction of Bangkok Dusit i.e., Bangkok Dusit and Chularat Hospital go up and down completely randomly.

Pair Corralation between Bangkok Dusit and Chularat Hospital

Assuming the 90 days trading horizon Bangkok Dusit Medical is expected to under-perform the Chularat Hospital. But the stock apears to be less risky and, when comparing its historical volatility, Bangkok Dusit Medical is 92.24 times less risky than Chularat Hospital. The stock trades about -0.31 of its potential returns per unit of risk. The Chularat Hospital Public is currently generating about 0.11 of returns per unit of risk over similar time horizon. If you would invest  293.00  in Chularat Hospital Public on September 23, 2024 and sell it today you would lose (45.00) from holding Chularat Hospital Public or give up 15.36% of portfolio value over 90 days.

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

Bangkok Dusit Medical  vs.  Chularat Hospital 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 conflicting performance in the last few months, the Stock's forward-looking signals remain quite persistent which may send shares a bit higher in January 2025. The latest mess may also be a sign of long-standing up-swing for the company institutional investors.

Chularat Hospital Public

Risk-Adjusted Performance

8 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Chularat Hospital Public are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak fundamental drivers, Chularat Hospital sustained solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Bangkok Dusit and Chularat Hospital

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

The idea behind Bangkok Dusit Medical and Chularat Hospital 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 Portfolio Rebalancing module to analyze risk-adjusted returns against different time horizons to find asset-allocation targets.