Correlation Between Bumrungrad Hospital and Vastned Retail

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

Diversification Opportunities for Bumrungrad Hospital and Vastned Retail

0.09

Correlation Coefficient

Bumrungrad Hospital  Vastned Retail

Significant diversification

The 3 months correlation between Bumrungrad and Vastned is 0.09. Overlapping area represents the amount of risk that can be diversified away by holding Bumrungrad Hospital Public and Vastned Retail NV in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Vastned Retail NV 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 Vastned Retail. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Vastned Retail NV has no effect on the direction of Bumrungrad Hospital i.e., Bumrungrad Hospital and Vastned Retail go up and down completely randomly.

Pair Corralation between Bumrungrad Hospital and Vastned Retail

Assuming the 90 days trading horizon Bumrungrad Hospital Public is expected to under-perform the Vastned Retail. In addition to that, Bumrungrad Hospital is 2.96 times more volatile than Vastned Retail NV. It trades about -0.18 of its total potential returns per unit of risk. Vastned Retail NV is currently generating about -0.08 per unit of volatility. If you would invest  2,187  in Vastned Retail NV on September 17, 2024 and sell it today you would lose (102.00) from holding Vastned Retail NV or give up 4.66% 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.  Vastned Retail NV

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.

Vastned Retail NV

Risk-Adjusted Performance

0 of 100

Very Weak

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

Pair Trading with Bumrungrad Hospital and Vastned Retail

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

The idea behind Bumrungrad Hospital Public and Vastned Retail NV 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 Idea Breakdown module to analyze constituents of all Macroaxis ideas. Macroaxis investment ideas are predefined, sector-focused investing themes.