Correlation Between Bumrungrad Hospital and Yakult Honsha

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

Diversification Opportunities for Bumrungrad Hospital and Yakult Honsha

0.84

Correlation Coefficient

Bumrungrad Hospital  Yakult Honsha

Very poor diversification

The 3 months correlation between Bumrungrad and Yakult is 0.84. Overlapping area represents the amount of risk that can be diversified away by holding Bumrungrad Hospital Public and Yakult Honsha CoLtd in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Yakult Honsha CoLtd 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 Yakult Honsha. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Yakult Honsha CoLtd has no effect on the direction of Bumrungrad Hospital i.e., Bumrungrad Hospital and Yakult Honsha go up and down completely randomly.

Pair Corralation between Bumrungrad Hospital and Yakult Honsha

Assuming the 90 days trading horizon Bumrungrad Hospital Public is expected to under-perform the Yakult Honsha. In addition to that, Bumrungrad Hospital is 1.43 times more volatile than Yakult Honsha CoLtd. It trades about -0.06 of its total potential returns per unit of risk. Yakult Honsha CoLtd is currently generating about 0.01 per unit of volatility. If you would invest  1,880  in Yakult Honsha CoLtd on September 2, 2024 and sell it today you would earn a total of  0.00  from holding Yakult Honsha CoLtd or generate 0.0% return on investment over 90 days.

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

Bumrungrad Hospital Public  vs.  Yakult Honsha CoLtd

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 latest fragile performance, the Stock's basic indicators remain stable and the current disturbance on Wall Street may also be a sign of long-run gains for the company stockholders.

Yakult Honsha CoLtd

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Yakult Honsha CoLtd has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable basic indicators, Yakult Honsha 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 Yakult Honsha

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

The idea behind Bumrungrad Hospital Public and Yakult Honsha CoLtd 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 Cryptocurrency Center module to build and monitor diversified portfolio of extremely risky digital assets and cryptocurrency.