Correlation Between Bangkok Dusit and Sri Trang

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

Diversification Opportunities for Bangkok Dusit and Sri Trang

0.75

Correlation Coefficient

Bangkok Dusit  Sri Trang

Poor diversification

The 3 months correlation between Bangkok and Sri is 0.75. Overlapping area represents the amount of risk that can be diversified away by holding Bangkok Dusit Medical and Sri Trang Gloves in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sri Trang Gloves 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 Sri Trang. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Sri Trang Gloves has no effect on the direction of Bangkok Dusit i.e., Bangkok Dusit and Sri Trang go up and down completely randomly.

Pair Corralation between Bangkok Dusit and Sri Trang

Assuming the 90 days trading horizon Bangkok Dusit Medical is expected to under-perform the Sri Trang. But the stock apears to be less risky and, when comparing its historical volatility, Bangkok Dusit Medical is 2.63 times less risky than Sri Trang. The stock trades about -0.08 of its potential returns per unit of risk. The Sri Trang Gloves is currently generating about 0.05 of returns per unit of risk over similar time horizon. If you would invest  1,020  in Sri Trang Gloves on August 31, 2024 and sell it today you would earn a total of  70.00  from holding Sri Trang Gloves or generate 6.86% return on investment over 90 days.

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

Bangkok Dusit Medical  vs.  Sri Trang Gloves

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.

Sri Trang Gloves

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Sri Trang Gloves are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. Despite quite conflicting forward-looking signals, Sri Trang may actually be approaching a critical reversion point that can send shares even higher in December 2024.

Pair Trading with Bangkok Dusit and Sri Trang

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

The idea behind Bangkok Dusit Medical and Sri Trang Gloves 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 Latest Portfolios module to quick portfolio dashboard that showcases your latest portfolios.