Correlation Between Bumrungrad Hospital and Heng Leasing

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

By analyzing existing cross correlation between Bumrungrad Hospital Public and Heng Leasing Capital, you can compare the effects of market volatilities on Bumrungrad Hospital and Heng Leasing 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 Heng Leasing. Check out your portfolio center. Please also check ongoing floating volatility patterns of Bumrungrad Hospital and Heng Leasing.

Diversification Opportunities for Bumrungrad Hospital and Heng Leasing

0.89

Correlation Coefficient

Bumrungrad Hospital  Heng Leasing

Very poor diversification

The 3 months correlation between Bumrungrad and Heng is 0.89. Overlapping area represents the amount of risk that can be diversified away by holding Bumrungrad Hospital Public and Heng Leasing Capital in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Heng Leasing Capital 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 Public are associated (or correlated) with Heng Leasing. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Heng Leasing Capital has no effect on the direction of Bumrungrad Hospital i.e., Bumrungrad Hospital and Heng Leasing go up and down completely randomly.

Pair Corralation between Bumrungrad Hospital and Heng Leasing

Assuming the 90 days horizon Bumrungrad Hospital Public is expected to under-perform the Heng Leasing. But the stock apears to be less risky and, when comparing its historical volatility, Bumrungrad Hospital Public is 1.92 times less risky than Heng Leasing. The stock trades about -0.11 of its potential returns per unit of risk. The Heng Leasing Capital is currently generating about -0.02 of returns per unit of risk over similar time horizon. If you would invest  131.00  in Heng Leasing Capital on September 3, 2024 and sell it today you would lose (13.00) from holding Heng Leasing Capital or give up 9.92% of portfolio value over 90 days.

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

Bumrungrad Hospital Public  vs.  Heng Leasing Capital

Bumrungrad Hospital

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Bumrungrad Hospital 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 fundamental drivers 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.

Heng Leasing Capital

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Heng Leasing Capital has generated negative risk-adjusted returns adding no value to investors with long positions. Despite quite persistent forward-looking signals, Heng Leasing is not utilizing all of its potentials. The latest stock price mess, may contribute to short-term losses for the institutional investors.

Pair Trading with Bumrungrad Hospital and Heng Leasing

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

The idea behind Bumrungrad Hospital Public and Heng Leasing Capital 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 Portfolio Diagnostics module to use generated alerts and portfolio events aggregator to diagnose current holdings.