Correlation Between Ekachai Medical and Thonburi Healthcare

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

By analyzing existing cross correlation between Ekachai Medical Care and Thonburi Healthcare Grp, you can compare the effects of market volatilities on Ekachai Medical and Thonburi Healthcare 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 Ekachai Medical with a short position of Thonburi Healthcare. Check out your portfolio center. Please also check ongoing floating volatility patterns of Ekachai Medical and Thonburi Healthcare.

Diversification Opportunities for Ekachai Medical and Thonburi Healthcare

0.7

Correlation Coefficient

Ekachai Medical  Thonburi Healthcare

Poor diversification

The 3 months correlation between Ekachai and Thonburi is 0.7. Overlapping area represents the amount of risk that can be diversified away by holding Ekachai Medical Care and Thonburi Healthcare Grp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Thonburi Healthcare Grp and Ekachai Medical 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 Ekachai Medical Care are associated (or correlated) with Thonburi Healthcare. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Thonburi Healthcare Grp has no effect on the direction of Ekachai Medical i.e., Ekachai Medical and Thonburi Healthcare go up and down completely randomly.

Pair Corralation between Ekachai Medical and Thonburi Healthcare

Assuming the 90 days trading horizon Ekachai Medical Care is expected to under-perform the Thonburi Healthcare. But the stock apears to be less risky and, when comparing its historical volatility, Ekachai Medical Care is 5.48 times less risky than Thonburi Healthcare. The stock trades about -0.11 of its potential returns per unit of risk. The Thonburi Healthcare Grp is currently generating about 0.04 of returns per unit of risk over similar time horizon. If you would invest  1,760  in Thonburi Healthcare Grp on September 13, 2024 and sell it today you would earn a total of  20.00  from holding Thonburi Healthcare Grp or generate 1.14% return on investment over 90 days.

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

Ekachai Medical Care  vs.  Thonburi Healthcare Grp

Ekachai Medical Care

Risk-Adjusted Performance

0 of 100

Very Weak

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

Thonburi Healthcare Grp

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Thonburi Healthcare Grp has generated negative risk-adjusted returns adding no value to investors with long positions. Despite conflicting performance in the last few months, the Stock's technical and fundamental indicators remain quite persistent which may send shares a bit higher in January 2025. The latest mess may also be a sign of long-standing up-swing for the company institutional investors.

Pair Trading with Ekachai Medical and Thonburi Healthcare

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

The idea behind Ekachai Medical Care and Thonburi Healthcare Grp 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 Portfolio Rebalancing module to analyze risk-adjusted returns against different time horizons to find asset-allocation targets.