Correlation Between Bumrungrad Hospital and Warrix Sport

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

Diversification Opportunities for Bumrungrad Hospital and Warrix Sport

0.05

Correlation Coefficient

Bumrungrad Hospital  Warrix Sport

Significant diversification

The 3 months correlation between Bumrungrad and Warrix is 0.05. Overlapping area represents the amount of risk that can be diversified away by holding Bumrungrad Hospital PCL and Warrix Sport PCL in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Warrix Sport PCL 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 Warrix Sport. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Warrix Sport PCL has no effect on the direction of Bumrungrad Hospital i.e., Bumrungrad Hospital and Warrix Sport go up and down completely randomly.

Pair Corralation between Bumrungrad Hospital and Warrix Sport

Assuming the 90 days horizon Bumrungrad Hospital PCL is expected to under-perform the Warrix Sport. But the stock apears to be less risky and, when comparing its historical volatility, Bumrungrad Hospital PCL is 1.25 times less risky than Warrix Sport. The stock trades about -0.05 of its potential returns per unit of risk. The Warrix Sport PCL is currently generating about -0.04 of returns per unit of risk over similar time horizon. If you would invest  384.00  in Warrix Sport PCL on December 1, 2024 and sell it today you would lose (26.00) from holding Warrix Sport PCL or give up 6.77% of portfolio value over 90 days.

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

Bumrungrad Hospital PCL  vs.  Warrix Sport PCL

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 quite persistent fundamental drivers, Bumrungrad Hospital is not utilizing all of its potentials. The latest stock price mess, may contribute to short-term losses for the institutional investors.

Warrix Sport PCL

Risk-Adjusted Performance

Very Weak

Over the last 90 days Warrix Sport PCL has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong basic indicators, Warrix Sport is not utilizing all of its potentials. The latest stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Bumrungrad Hospital and Warrix Sport

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

The idea behind Bumrungrad Hospital PCL and Warrix Sport PCL 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 Comparator module to compare the composition, asset allocations and performance of any two portfolios in your account.