Correlation Between Galaxy Gaming and Bangkok Dusit

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

By analyzing existing cross correlation between Galaxy Gaming and Bangkok Dusit Medical, you can compare the effects of market volatilities on Galaxy Gaming and Bangkok Dusit 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 Galaxy Gaming with a short position of Bangkok Dusit. Check out your portfolio center. Please also check ongoing floating volatility patterns of Galaxy Gaming and Bangkok Dusit.

Diversification Opportunities for Galaxy Gaming and Bangkok Dusit

0.06

Correlation Coefficient

Galaxy Gaming  Bangkok Dusit

Significant diversification

The 3 months correlation between Galaxy and Bangkok is 0.06. Overlapping area represents the amount of risk that can be diversified away by holding Galaxy Gaming and Bangkok Dusit Medical in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Bangkok Dusit Medical and Galaxy Gaming 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 Galaxy Gaming are associated (or correlated) with Bangkok Dusit. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Bangkok Dusit Medical has no effect on the direction of Galaxy Gaming i.e., Galaxy Gaming and Bangkok Dusit go up and down completely randomly.

Pair Corralation between Galaxy Gaming and Bangkok Dusit

Given the investment horizon of 90 days Galaxy Gaming is expected to generate 1.47 times more return on investment than Bangkok Dusit. However, Galaxy Gaming is 1.47 times more volatile than Bangkok Dusit Medical. It trades about 0.06 of its potential returns per unit of risk. Bangkok Dusit Medical is currently generating about 0.04 per unit of risk. If you would invest  273.00  in Galaxy Gaming on December 21, 2024 and sell it today you would earn a total of  7.00  from holding Galaxy Gaming or generate 2.56% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	93.65%
Values	Daily Returns

Galaxy Gaming  vs.  Bangkok Dusit Medical

Galaxy Gaming

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Galaxy Gaming are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. In spite of fairly strong basic indicators, Galaxy Gaming is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Bangkok Dusit Medical

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Bangkok Dusit Medical are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. In spite of fairly strong basic indicators, Bangkok Dusit is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Galaxy Gaming and Bangkok Dusit

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

The idea behind Galaxy Gaming and Bangkok Dusit Medical 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 Performance Analysis module to check effects of mean-variance optimization against your current asset allocation.