Correlation Between Crown Seal and Ratchaphruek Hospital

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

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

Diversification Opportunities for Crown Seal and Ratchaphruek Hospital

0.98

Correlation Coefficient

Crown Seal  Ratchaphruek Hospital

Almost no diversification

The 3 months correlation between Crown and Ratchaphruek is 0.98. Overlapping area represents the amount of risk that can be diversified away by holding Crown Seal Public and Ratchaphruek Hospital Public in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Ratchaphruek Hospital and Crown Seal 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 Crown Seal Public are associated (or correlated) with Ratchaphruek Hospital. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Ratchaphruek Hospital has no effect on the direction of Crown Seal i.e., Crown Seal and Ratchaphruek Hospital go up and down completely randomly.

Pair Corralation between Crown Seal and Ratchaphruek Hospital

Assuming the 90 days trading horizon Crown Seal Public is expected to generate 1.03 times more return on investment than Ratchaphruek Hospital. However, Crown Seal is 1.03 times more volatile than Ratchaphruek Hospital Public. It trades about 0.04 of its potential returns per unit of risk. Ratchaphruek Hospital Public is currently generating about 0.04 per unit of risk. If you would invest  4,445  in Crown Seal Public on September 4, 2024 and sell it today you would earn a total of  155.00  from holding Crown Seal Public or generate 3.49% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Strong
Accuracy	94.0%
Values	Daily Returns

Crown Seal Public  vs.  Ratchaphruek Hospital Public

Crown Seal Public

Risk-Adjusted Performance

5 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Crown Seal Public are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. Despite quite persistent fundamental indicators, Crown Seal is not utilizing all of its potentials. The latest stock price mess, may contribute to short-term losses for the institutional investors.

Ratchaphruek Hospital

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Ratchaphruek Hospital Public has generated negative risk-adjusted returns adding no value to investors with long positions. Despite quite persistent technical indicators, Ratchaphruek Hospital 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 Crown Seal and Ratchaphruek Hospital

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

The idea behind Crown Seal Public and Ratchaphruek Hospital Public 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.