Correlation Between CP Tower and Bangkok Commercial

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

By analyzing existing cross correlation between CP Tower Growth and Bangkok Commercial Property, you can compare the effects of market volatilities on CP Tower and Bangkok Commercial 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 CP Tower with a short position of Bangkok Commercial. Check out your portfolio center. Please also check ongoing floating volatility patterns of CP Tower and Bangkok Commercial.

Diversification Opportunities for CP Tower and Bangkok Commercial

0.23

Correlation Coefficient

CP Tower  Bangkok Commercial

Modest diversification

The 3 months correlation between CPTGF and Bangkok is 0.23. Overlapping area represents the amount of risk that can be diversified away by holding CP Tower Growth and Bangkok Commercial Property in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Bangkok Commercial and CP Tower 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 CP Tower Growth are associated (or correlated) with Bangkok Commercial. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Bangkok Commercial has no effect on the direction of CP Tower i.e., CP Tower and Bangkok Commercial go up and down completely randomly.

Pair Corralation between CP Tower and Bangkok Commercial

Assuming the 90 days trading horizon CP Tower is expected to generate 324.49 times less return on investment than Bangkok Commercial. But when comparing it to its historical volatility, CP Tower Growth is 67.91 times less risky than Bangkok Commercial. It trades about 0.03 of its potential returns per unit of risk. Bangkok Commercial Property is currently generating about 0.13 of returns per unit of risk over similar time horizon. If you would invest  0.00  in Bangkok Commercial Property on September 3, 2024 and sell it today you would earn a total of  905.00  from holding Bangkok Commercial Property or generate 9.223372036854776E16% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	77.42%
Values	Daily Returns

CP Tower Growth  vs.  Bangkok Commercial Property

CP Tower Growth

Risk-Adjusted Performance

0 of 100

Weak

Over the last 90 days CP Tower Growth has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong fundamental drivers, CP Tower is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Bangkok Commercial

Risk-Adjusted Performance

10 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Bangkok Commercial Property are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak fundamental drivers, Bangkok Commercial sustained solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with CP Tower and Bangkok Commercial

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

The idea behind CP Tower Growth and Bangkok Commercial Property 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 Latest Portfolios module to quick portfolio dashboard that showcases your latest portfolios.