Correlation Between Bumrungrad Hospital and SIDETRADE

Can any of the company-specific risk be diversified away by investing in both Bumrungrad Hospital and SIDETRADE 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 SIDETRADE 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 SIDETRADE EO 1, you can compare the effects of market volatilities on Bumrungrad Hospital and SIDETRADE 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 SIDETRADE. Check out your portfolio center. Please also check ongoing floating volatility patterns of Bumrungrad Hospital and SIDETRADE.

Diversification Opportunities for Bumrungrad Hospital and SIDETRADE

0.03

Correlation Coefficient

Bumrungrad Hospital  SIDETRADE

Significant diversification

The 3 months correlation between Bumrungrad and SIDETRADE is 0.03. Overlapping area represents the amount of risk that can be diversified away by holding Bumrungrad Hospital Public and SIDETRADE EO 1 in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SIDETRADE EO 1 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 SIDETRADE. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of SIDETRADE EO 1 has no effect on the direction of Bumrungrad Hospital i.e., Bumrungrad Hospital and SIDETRADE go up and down completely randomly.

Pair Corralation between Bumrungrad Hospital and SIDETRADE

Assuming the 90 days trading horizon Bumrungrad Hospital Public is expected to under-perform the SIDETRADE. In addition to that, Bumrungrad Hospital is 1.38 times more volatile than SIDETRADE EO 1. It trades about -0.06 of its total potential returns per unit of risk. SIDETRADE EO 1 is currently generating about -0.04 per unit of volatility. If you would invest  22,400  in SIDETRADE EO 1 on September 27, 2024 and sell it today you would lose (300.00) from holding SIDETRADE EO 1 or give up 1.34% of portfolio value over 90 days.

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

Bumrungrad Hospital Public  vs.  SIDETRADE EO 1

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 fragile performance in the last few months, the Stock's basic indicators remain nearly stable which may send shares a bit higher in January 2025. The current disturbance may also be a sign of long-run up-swing for the company stockholders.

SIDETRADE EO 1

Risk-Adjusted Performance

0 of 100

Weak

Over the last 90 days SIDETRADE EO 1 has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable basic indicators, SIDETRADE is not utilizing all of its potentials. The newest stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with Bumrungrad Hospital and SIDETRADE

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

The idea behind Bumrungrad Hospital Public and SIDETRADE EO 1 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 Fundamentals Comparison module to compare fundamentals across multiple equities to find investing opportunities.