Correlation Between Central Pattana and Bangkok Chain

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

By analyzing existing cross correlation between Central Pattana Public and Bangkok Chain Hospital, you can compare the effects of market volatilities on Central Pattana and Bangkok Chain 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 Central Pattana with a short position of Bangkok Chain. Check out your portfolio center. Please also check ongoing floating volatility patterns of Central Pattana and Bangkok Chain.

Diversification Opportunities for Central Pattana and Bangkok Chain

0.8

Correlation Coefficient

Central Pattana  Bangkok Chain

Very poor diversification

The 3 months correlation between Central and Bangkok is 0.8. Overlapping area represents the amount of risk that can be diversified away by holding Central Pattana Public and Bangkok Chain Hospital in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Bangkok Chain Hospital and Central Pattana 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 Central Pattana Public are associated (or correlated) with Bangkok Chain. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Bangkok Chain Hospital has no effect on the direction of Central Pattana i.e., Central Pattana and Bangkok Chain go up and down completely randomly.

Pair Corralation between Central Pattana and Bangkok Chain

Assuming the 90 days trading horizon Central Pattana is expected to generate 1.09 times less return on investment than Bangkok Chain. In addition to that, Central Pattana is 1.03 times more volatile than Bangkok Chain Hospital. It trades about 0.03 of its total potential returns per unit of risk. Bangkok Chain Hospital is currently generating about 0.03 per unit of volatility. If you would invest  1,640  in Bangkok Chain Hospital on September 4, 2024 and sell it today you would earn a total of  40.00  from holding Bangkok Chain Hospital or generate 2.44% return on investment over 90 days.

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

Central Pattana Public  vs.  Bangkok Chain Hospital

Central Pattana Public

Risk-Adjusted Performance

2 of 100

Weak

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

Bangkok Chain Hospital

Risk-Adjusted Performance

2 of 100

Weak

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

Pair Trading with Central Pattana and Bangkok Chain

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

The idea behind Central Pattana Public and Bangkok Chain Hospital 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.

Check out your portfolio center.

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 Volatility Analysis module to get historical volatility and risk analysis based on latest market data.