Correlation Between Digital Telecommunicatio and Bumrungrad Hospital

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

By analyzing existing cross correlation between Digital Telecommunications Infrastructure and Bumrungrad Hospital PCL, you can compare the effects of market volatilities on Digital Telecommunicatio and Bumrungrad 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 Digital Telecommunicatio with a short position of Bumrungrad Hospital. Check out your portfolio center. Please also check ongoing floating volatility patterns of Digital Telecommunicatio and Bumrungrad Hospital.

Diversification Opportunities for Digital Telecommunicatio and Bumrungrad Hospital

0.46

Correlation Coefficient

Digital Telecommunicatio  Bumrungrad Hospital

Very weak diversification

The 3 months correlation between Digital and Bumrungrad is 0.46. Overlapping area represents the amount of risk that can be diversified away by holding Digital Telecommunications Inf and Bumrungrad Hospital PCL in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Bumrungrad Hospital PCL and Digital Telecommunicatio 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 Digital Telecommunications Infrastructure are associated (or correlated) with Bumrungrad Hospital. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Bumrungrad Hospital PCL has no effect on the direction of Digital Telecommunicatio i.e., Digital Telecommunicatio and Bumrungrad Hospital go up and down completely randomly.

Pair Corralation between Digital Telecommunicatio and Bumrungrad Hospital

Assuming the 90 days trading horizon Digital Telecommunications Infrastructure is expected to under-perform the Bumrungrad Hospital. But the stock apears to be less risky and, when comparing its historical volatility, Digital Telecommunications Infrastructure is 1.97 times less risky than Bumrungrad Hospital. The stock trades about -0.12 of its potential returns per unit of risk. The Bumrungrad Hospital PCL is currently generating about -0.05 of returns per unit of risk over similar time horizon. If you would invest  20,900  in Bumrungrad Hospital PCL on December 2, 2024 and sell it today you would lose (1,350) from holding Bumrungrad Hospital PCL or give up 6.46% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	98.36%
Values	Daily Returns

Digital Telecommunications Inf  vs.  Bumrungrad Hospital PCL

Digital Telecommunicatio

Risk-Adjusted Performance

Very Weak

Over the last 90 days Digital Telecommunications Infrastructure has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest weak performance, the Stock's technical and fundamental indicators remain persistent and the latest mess on Wall Street may also be a sign of long-standing gains for the company institutional investors.

Bumrungrad Hospital PCL

Risk-Adjusted Performance

Very Weak

Over the last 90 days Bumrungrad Hospital PCL has generated negative risk-adjusted returns adding no value to investors with long positions. Despite quite persistent fundamental drivers, Bumrungrad 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 Digital Telecommunicatio and Bumrungrad Hospital

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

The idea behind Digital Telecommunications Infrastructure and Bumrungrad Hospital PCL 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 Companies Directory module to evaluate performance of over 100,000 Stocks, Funds, and ETFs against different fundamentals.