Correlation Between Dusit Thani and LH Shopping

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

Diversification Opportunities for Dusit Thani and LH Shopping

0.71

Correlation Coefficient

Dusit Thani  LH Shopping

Poor diversification

The 3 months correlation between Dusit and LHSC is 0.71. Overlapping area represents the amount of risk that can be diversified away by holding Dusit Thani Freehold and LH Shopping Centers in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on LH Shopping Centers 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 LH Shopping. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of LH Shopping Centers has no effect on the direction of Dusit Thani i.e., Dusit Thani and LH Shopping go up and down completely randomly.

Pair Corralation between Dusit Thani and LH Shopping

Assuming the 90 days trading horizon Dusit Thani is expected to generate 2.39 times less return on investment than LH Shopping. In addition to that, Dusit Thani is 1.14 times more volatile than LH Shopping Centers. It trades about 0.06 of its total potential returns per unit of risk. LH Shopping Centers is currently generating about 0.16 per unit of volatility. If you would invest  1,110  in LH Shopping Centers on December 30, 2024 and sell it today you would earn a total of  100.00  from holding LH Shopping Centers or generate 9.01% return on investment over 90 days.

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

Dusit Thani Freehold  vs.  LH Shopping Centers

Dusit Thani Freehold

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Dusit Thani Freehold are ranked lower than 4 (%) 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.

LH Shopping Centers

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in LH Shopping Centers are ranked lower than 12 (%) of all global equities and portfolios over the last 90 days. Despite quite conflicting forward-looking signals, LH Shopping may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Pair Trading with Dusit Thani and LH Shopping

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

The idea behind Dusit Thani Freehold and LH Shopping Centers 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 Headlines Timeline module to stay connected to all market stories and filter out noise. Drill down to analyze hype elasticity.