Correlation Between Dusit Thani and AIM Commercial

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

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

Diversification Opportunities for Dusit Thani and AIM Commercial

0.25

Correlation Coefficient

Dusit Thani  AIM Commercial

Modest diversification

The 3 months correlation between Dusit and AIM is 0.25. Overlapping area represents the amount of risk that can be diversified away by holding Dusit Thani Freehold and AIM Commercial Growth in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on AIM Commercial Growth and Dusit Thani 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 Dusit Thani Freehold are associated (or correlated) with AIM Commercial. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of AIM Commercial Growth has no effect on the direction of Dusit Thani i.e., Dusit Thani and AIM Commercial go up and down completely randomly.

Pair Corralation between Dusit Thani and AIM Commercial

Assuming the 90 days trading horizon Dusit Thani Freehold is expected to generate 89.65 times more return on investment than AIM Commercial. However, Dusit Thani is 89.65 times more volatile than AIM Commercial Growth. It trades about 0.13 of its potential returns per unit of risk. AIM Commercial Growth is currently generating about 0.01 per unit of risk. If you would invest  0.00  in Dusit Thani Freehold on September 3, 2024 and sell it today you would earn a total of  496.00  from holding Dusit Thani Freehold or generate 9.223372036854776E16% return on investment over 90 days.

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

Dusit Thani Freehold  vs.  AIM Commercial Growth

Dusit Thani Freehold

Risk-Adjusted Performance

9 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Dusit Thani Freehold are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. Despite somewhat conflicting fundamental drivers, Dusit Thani sustained solid returns over the last few months and may actually be approaching a breakup point.

AIM Commercial Growth

Risk-Adjusted Performance

0 of 100

Very Weak

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

Pair Trading with Dusit Thani and AIM Commercial

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

The idea behind Dusit Thani Freehold and AIM Commercial Growth 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 Transaction History module to view history of all your transactions and understand their impact on performance.