Correlation Between Bangkok Dusit and TCM Public

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

Diversification Opportunities for Bangkok Dusit and TCM Public

0.61

Correlation Coefficient

Bangkok Dusit  TCM Public

Poor diversification

The 3 months correlation between Bangkok and TCM is 0.61. Overlapping area represents the amount of risk that can be diversified away by holding Bangkok Dusit Medical and TCM Public in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on TCM 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 TCM Public. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of TCM Public has no effect on the direction of Bangkok Dusit i.e., Bangkok Dusit and TCM Public go up and down completely randomly.

Pair Corralation between Bangkok Dusit and TCM Public

Assuming the 90 days trading horizon Bangkok Dusit Medical is expected to generate 0.63 times more return on investment than TCM Public. However, Bangkok Dusit Medical is 1.58 times less risky than TCM Public. It trades about -0.15 of its potential returns per unit of risk. TCM Public is currently generating about -0.24 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.  TCM 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.

TCM Public

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days TCM Public 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.

Pair Trading with Bangkok Dusit and TCM Public

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

The idea behind Bangkok Dusit Medical and TCM 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 Pair Correlation module to compare performance and examine fundamental relationship between any two equity instruments.