Correlation Between Dusit Thani and AIM Industrial

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

Diversification Opportunities for Dusit Thani and AIM Industrial

0.32

Correlation Coefficient

Dusit Thani  AIM Industrial

Weak diversification

The 3 months correlation between Dusit and AIM is 0.32. Overlapping area represents the amount of risk that can be diversified away by holding Dusit Thani Freehold and AIM Industrial Growth in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on AIM Industrial 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 Industrial. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of AIM Industrial Growth has no effect on the direction of Dusit Thani i.e., Dusit Thani and AIM Industrial go up and down completely randomly.

Pair Corralation between Dusit Thani and AIM Industrial

Assuming the 90 days trading horizon Dusit Thani Freehold is expected to generate 1.62 times more return on investment than AIM Industrial. However, Dusit Thani is 1.62 times more volatile than AIM Industrial Growth. It trades about 0.03 of its potential returns per unit of risk. AIM Industrial Growth is currently generating about 0.03 per unit of risk. If you would invest  505.00  in Dusit Thani Freehold on December 2, 2024 and sell it today you would earn a total of  10.00  from holding Dusit Thani Freehold or generate 1.98% 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 Industrial Growth

Dusit Thani Freehold

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Dusit Thani Freehold are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. Despite somewhat strong fundamental drivers, Dusit Thani is not utilizing all of its potentials. The newest stock price disturbance, may contribute to short-term losses for the investors.

AIM Industrial Growth

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in AIM Industrial Growth are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. Despite somewhat strong primary indicators, AIM Industrial is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Dusit Thani and AIM Industrial

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

The idea behind Dusit Thani Freehold and AIM Industrial 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.

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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 Commodity Channel module to use Commodity Channel Index to analyze current equity momentum.