Correlation Between E For and Airports

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

By analyzing existing cross correlation between E for L and Airports of Thailand, you can compare the effects of market volatilities on E For and Airports 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 E For with a short position of Airports. Check out your portfolio center. Please also check ongoing floating volatility patterns of E For and Airports.

Diversification Opportunities for E For and Airports

-0.62

Correlation Coefficient

E For  Airports

Excellent diversification

The 3 months correlation between EFORL and Airports is -0.62. Overlapping area represents the amount of risk that can be diversified away by holding E for L and Airports of Thailand in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Airports of Thailand and E For 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 E for L are associated (or correlated) with Airports. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Airports of Thailand has no effect on the direction of E For i.e., E For and Airports go up and down completely randomly.

Pair Corralation between E For and Airports

Assuming the 90 days trading horizon E for L is expected to generate 6.78 times more return on investment than Airports. However, E For is 6.78 times more volatile than Airports of Thailand. It trades about 0.25 of its potential returns per unit of risk. Airports of Thailand is currently generating about -0.02 per unit of risk. If you would invest  12.00  in E for L on September 12, 2024 and sell it today you would earn a total of  16.00  from holding E for L or generate 133.33% return on investment over 90 days.

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

E for L  vs.  Airports of Thailand

E for L

Risk-Adjusted Performance

19 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in E for L are ranked lower than 19 (%) of all global equities and portfolios over the last 90 days. Despite somewhat conflicting fundamental drivers, E For sustained solid returns over the last few months and may actually be approaching a breakup point.

Airports of Thailand

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Airports of Thailand has generated negative risk-adjusted returns adding no value to investors with long positions. Despite quite persistent basic indicators, Airports is not utilizing all of its potentials. The current stock price mess, may contribute to short-term losses for the institutional investors.

Pair Trading with E For and Airports

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

The idea behind E for L and Airports of Thailand 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 My Watchlist Analysis module to analyze my current watchlist and to refresh optimization strategy. Macroaxis watchlist is based on self-learning algorithm to remember stocks you like.