Correlation Between Central Pattana and Bangkok Dusit

Can any of the company-specific risk be diversified away by investing in both Central Pattana and Bangkok Dusit 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 Dusit 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 Dusit Medical, you can compare the effects of market volatilities on Central Pattana and Bangkok Dusit 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 Dusit. Check out your portfolio center. Please also check ongoing floating volatility patterns of Central Pattana and Bangkok Dusit.

Diversification Opportunities for Central Pattana and Bangkok Dusit

0.84

Correlation Coefficient

Central Pattana  Bangkok Dusit

Very poor diversification

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

Pair Corralation between Central Pattana and Bangkok Dusit

Assuming the 90 days trading horizon Central Pattana Public is expected to generate 0.96 times more return on investment than Bangkok Dusit. However, Central Pattana Public is 1.04 times less risky than Bangkok Dusit. It trades about -0.15 of its potential returns per unit of risk. Bangkok Dusit Medical is currently generating about -0.26 per unit of risk. If you would invest  6,300  in Central Pattana Public on September 3, 2024 and sell it today you would lose (300.00) from holding Central Pattana Public or give up 4.76% of portfolio value over 90 days.

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

Central Pattana Public  vs.  Bangkok Dusit Medical

Central Pattana Public

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Central Pattana Public are ranked lower than 1 (%) 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 Dusit Medical

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Bangkok Dusit Medical has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest conflicting performance, the Stock's forward-looking signals remain persistent and the latest mess on Wall Street may also be a sign of long-standing gains for the company institutional investors.

Pair Trading with Central Pattana and Bangkok Dusit

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

The idea behind Central Pattana Public and Bangkok Dusit Medical 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 Analyst Advice module to analyst recommendations and target price estimates broken down by several categories.