Correlation Between Chumporn Palm and Airports

Can any of the company-specific risk be diversified away by investing in both Chumporn Palm and Airports 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 Chumporn Palm and Airports into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Chumporn Palm Oil and Airports of Thailand, you can compare the effects of market volatilities on Chumporn Palm and Airports 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 Chumporn Palm with a short position of Airports. Check out your portfolio center. Please also check ongoing floating volatility patterns of Chumporn Palm and Airports.

Diversification Opportunities for Chumporn Palm and Airports

-0.54

Correlation Coefficient

Chumporn Palm  Airports

Excellent diversification

The 3 months correlation between Chumporn and Airports is -0.54. Overlapping area represents the amount of risk that can be diversified away by holding Chumporn Palm Oil and Airports of Thailand in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Airports of Thailand and Chumporn Palm 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 Chumporn Palm Oil are associated (or correlated) with Airports. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Airports of Thailand has no effect on the direction of Chumporn Palm i.e., Chumporn Palm and Airports go up and down completely randomly.

Pair Corralation between Chumporn Palm and Airports

Assuming the 90 days trading horizon Chumporn Palm Oil is expected to generate 0.53 times more return on investment than Airports. However, Chumporn Palm Oil is 1.89 times less risky than Airports. It trades about 0.03 of its potential returns per unit of risk. Airports of Thailand is currently generating about -0.23 per unit of risk. If you would invest  284.00  in Chumporn Palm Oil on December 1, 2024 and sell it today you would earn a total of  6.00  from holding Chumporn Palm Oil or generate 2.11% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	100.0%
Values	Daily Returns

Chumporn Palm Oil  vs.  Airports of Thailand

Chumporn Palm Oil

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Chumporn Palm Oil are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. Despite quite persistent forward indicators, Chumporn Palm is not utilizing all of its potentials. The latest stock price mess, may contribute to short-term losses for the institutional investors.

Airports of Thailand

Risk-Adjusted Performance

Very Weak

Over the last 90 days Airports of Thailand has generated negative risk-adjusted returns adding no value to investors with long positions. Despite weak performance in the last few months, the Stock's basic indicators remain quite persistent which may send shares a bit higher in April 2025. The latest mess may also be a sign of long-standing up-swing for the company institutional investors.

Pair Trading with Chumporn Palm and Airports

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

The idea behind Chumporn Palm Oil and Airports of Thailand 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 Equity Analysis module to research over 250,000 global equities including funds, stocks and ETFs to find investment opportunities.