Correlation Between Bumrungrad Hospital and Dental Public

Can any of the company-specific risk be diversified away by investing in both Bumrungrad Hospital and Dental 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 Bumrungrad Hospital and Dental Public into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Bumrungrad Hospital PCL and Dental Public, you can compare the effects of market volatilities on Bumrungrad Hospital and Dental 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 Bumrungrad Hospital with a short position of Dental Public. Check out your portfolio center. Please also check ongoing floating volatility patterns of Bumrungrad Hospital and Dental Public.

Diversification Opportunities for Bumrungrad Hospital and Dental Public

0.76

Correlation Coefficient

Bumrungrad Hospital  Dental Public

Poor diversification

The 3 months correlation between Bumrungrad and Dental is 0.76. Overlapping area represents the amount of risk that can be diversified away by holding Bumrungrad Hospital PCL and Dental Public in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Dental Public and Bumrungrad Hospital 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 Bumrungrad Hospital PCL are associated (or correlated) with Dental Public. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Dental Public has no effect on the direction of Bumrungrad Hospital i.e., Bumrungrad Hospital and Dental Public go up and down completely randomly.

Pair Corralation between Bumrungrad Hospital and Dental Public

Assuming the 90 days horizon Bumrungrad Hospital PCL is expected to generate 1.11 times more return on investment than Dental Public. However, Bumrungrad Hospital is 1.11 times more volatile than Dental Public. It trades about -0.06 of its potential returns per unit of risk. Dental Public is currently generating about -0.35 per unit of risk. If you would invest  21,100  in Bumrungrad Hospital PCL on December 4, 2024 and sell it today you would lose (1,600) from holding Bumrungrad Hospital PCL or give up 7.58% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	98.33%
Values	Daily Returns

Bumrungrad Hospital PCL  vs.  Dental Public

Bumrungrad Hospital PCL

Risk-Adjusted Performance

Very Weak

Over the last 90 days Bumrungrad Hospital PCL has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest conflicting performance, the Stock's fundamental drivers remain persistent and the latest mess on Wall Street may also be a sign of long-standing gains for the company institutional investors.

Dental Public

Risk-Adjusted Performance

Very Weak

Over the last 90 days Dental Public has generated negative risk-adjusted returns adding no value to investors with long positions. Despite weak performance in the last few months, the Stock's fundamental drivers remain quite persistent which may send shares a bit higher in April 2025. The latest mess may also be a sign of long-standing up-swing for the company institutional investors.

Pair Trading with Bumrungrad Hospital and Dental Public

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

The idea behind Bumrungrad Hospital PCL and Dental 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 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.