Correlation Between GMS and Bangkok Dusit

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

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

Diversification Opportunities for GMS and Bangkok Dusit

0.0

Correlation Coefficient

GMS  Bangkok Dusit

Pay attention - limited upside

The 3 months correlation between GMS and Bangkok is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding GMS Inc 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 GMS 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 GMS Inc 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 GMS i.e., GMS and Bangkok Dusit go up and down completely randomly.

Pair Corralation between GMS and Bangkok Dusit

Considering the 90-day investment horizon GMS Inc is expected to generate 1.26 times more return on investment than Bangkok Dusit. However, GMS is 1.26 times more volatile than Bangkok Dusit Medical. It trades about 0.04 of its potential returns per unit of risk. Bangkok Dusit Medical is currently generating about 0.02 per unit of risk. If you would invest  6,104  in GMS Inc on October 25, 2024 and sell it today you would earn a total of  2,283  from holding GMS Inc or generate 37.4% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Flat
Strength	Insignificant
Accuracy	99.4%
Values	Daily Returns

GMS Inc  vs.  Bangkok Dusit Medical

GMS Inc

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days GMS Inc has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest weak performance, the Stock's primary indicators remain stable and the newest uproar on Wall Street may also be a sign of mid-term gains for the firm private investors.

Bangkok Dusit Medical

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Bangkok Dusit Medical has generated negative risk-adjusted returns adding no value to investors with long positions. 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 GMS and Bangkok Dusit

The main advantage of trading using opposite GMS and Bangkok Dusit positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if GMS 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 GMS Inc 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 Content Syndication module to quickly integrate customizable finance content to your own investment portal.