Correlation Between Bangkok Dusit and Vibhavadi Medical

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

Diversification Opportunities for Bangkok Dusit and Vibhavadi Medical

0.3

Correlation Coefficient

Bangkok Dusit  Vibhavadi Medical

Weak diversification

The 3 months correlation between Bangkok and Vibhavadi is 0.3. Overlapping area represents the amount of risk that can be diversified away by holding Bangkok Dusit Medical and Vibhavadi Medical Center in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Vibhavadi Medical Center 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 Vibhavadi Medical. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Vibhavadi Medical Center has no effect on the direction of Bangkok Dusit i.e., Bangkok Dusit and Vibhavadi Medical go up and down completely randomly.

Pair Corralation between Bangkok Dusit and Vibhavadi Medical

Assuming the 90 days trading horizon Bangkok Dusit Medical is expected to under-perform the Vibhavadi Medical. But the stock apears to be less risky and, when comparing its historical volatility, Bangkok Dusit Medical is 1.23 times less risky than Vibhavadi Medical. The stock trades about -0.18 of its potential returns per unit of risk. The Vibhavadi Medical Center is currently generating about -0.05 of returns per unit of risk over similar time horizon. If you would invest  224.00  in Vibhavadi Medical Center on September 12, 2024 and sell it today you would lose (14.00) from holding Vibhavadi Medical Center or give up 6.25% 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.  Vibhavadi Medical Center

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.

Vibhavadi Medical Center

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Vibhavadi Medical Center has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong fundamental drivers, Vibhavadi Medical 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 Vibhavadi Medical

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

The idea behind Bangkok Dusit Medical and Vibhavadi Medical Center 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 Theme Ratings module to determine theme ratings based on digital equity recommendations. Macroaxis theme ratings are based on combination of fundamental analysis and risk-adjusted market performance.