Correlation Between Bangkok Dusit and Thai President

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

Diversification Opportunities for Bangkok Dusit and Thai President

0.21

Correlation Coefficient

Bangkok Dusit  Thai President

Modest diversification

The 3 months correlation between Bangkok and Thai is 0.21. Overlapping area represents the amount of risk that can be diversified away by holding Bangkok Dusit Medical and Thai President Foods in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Thai President Foods 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 Thai President. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Thai President Foods has no effect on the direction of Bangkok Dusit i.e., Bangkok Dusit and Thai President go up and down completely randomly.

Pair Corralation between Bangkok Dusit and Thai President

Assuming the 90 days trading horizon Bangkok Dusit Medical is expected to under-perform the Thai President. In addition to that, Bangkok Dusit is 2.31 times more volatile than Thai President Foods. It trades about -0.08 of its total potential returns per unit of risk. Thai President Foods is currently generating about 0.07 per unit of volatility. If you would invest  19,556  in Thai President Foods on September 3, 2024 and sell it today you would earn a total of  544.00  from holding Thai President Foods or generate 2.78% return on investment over 90 days.

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

Bangkok Dusit Medical  vs.  Thai President Foods

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.

Thai President Foods

Risk-Adjusted Performance

5 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Thai President Foods are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. Despite somewhat strong primary indicators, Thai President is not utilizing all of its potentials. The latest stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Bangkok Dusit and Thai President

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

The idea behind Bangkok Dusit Medical and Thai President Foods 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 Equity Forecasting module to use basic forecasting models to generate price predictions and determine price momentum.