Correlation Between Bumrungrad Hospital and Wattanapat Hospital

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

Diversification Opportunities for Bumrungrad Hospital and Wattanapat Hospital

0.79

Correlation Coefficient

Bumrungrad Hospital  Wattanapat Hospital

Poor diversification

The 3 months correlation between Bumrungrad and Wattanapat is 0.79. Overlapping area represents the amount of risk that can be diversified away by holding Bumrungrad Hospital PCL and Wattanapat Hospital Trang in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Wattanapat Hospital Trang 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 Wattanapat Hospital. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Wattanapat Hospital Trang has no effect on the direction of Bumrungrad Hospital i.e., Bumrungrad Hospital and Wattanapat Hospital go up and down completely randomly.

Pair Corralation between Bumrungrad Hospital and Wattanapat Hospital

Assuming the 90 days horizon Bumrungrad Hospital is expected to generate 1397.6 times less return on investment than Wattanapat Hospital. But when comparing it to its historical volatility, Bumrungrad Hospital PCL is 28.24 times less risky than Wattanapat Hospital. It trades about 0.0 of its potential returns per unit of risk. Wattanapat Hospital Trang is currently generating about 0.05 of returns per unit of risk over similar time horizon. If you would invest  371.00  in Wattanapat Hospital Trang on December 4, 2024 and sell it today you would earn a total of  474.00  from holding Wattanapat Hospital Trang or generate 127.76% return on investment over 90 days.

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

Bumrungrad Hospital PCL  vs.  Wattanapat Hospital Trang

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.

Wattanapat Hospital Trang

Risk-Adjusted Performance

Very Weak

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

Pair Trading with Bumrungrad Hospital and Wattanapat Hospital

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

The idea behind Bumrungrad Hospital PCL and Wattanapat Hospital Trang 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 Pair Correlation module to compare performance and examine fundamental relationship between any two equity instruments.