Correlation Between Heng Leasing and Bangkok Chain

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

By analyzing existing cross correlation between Heng Leasing Capital and Bangkok Chain Hospital, you can compare the effects of market volatilities on Heng Leasing and Bangkok Chain 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 Heng Leasing with a short position of Bangkok Chain. Check out your portfolio center. Please also check ongoing floating volatility patterns of Heng Leasing and Bangkok Chain.

Diversification Opportunities for Heng Leasing and Bangkok Chain

0.84

Correlation Coefficient

Heng Leasing  Bangkok Chain

Very poor diversification

The 3 months correlation between Heng and Bangkok is 0.84. Overlapping area represents the amount of risk that can be diversified away by holding Heng Leasing Capital and Bangkok Chain Hospital in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Bangkok Chain Hospital and Heng Leasing 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 Heng Leasing Capital are associated (or correlated) with Bangkok Chain. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Bangkok Chain Hospital has no effect on the direction of Heng Leasing i.e., Heng Leasing and Bangkok Chain go up and down completely randomly.

Pair Corralation between Heng Leasing and Bangkok Chain

Assuming the 90 days trading horizon Heng Leasing Capital is expected to under-perform the Bangkok Chain. In addition to that, Heng Leasing is 1.71 times more volatile than Bangkok Chain Hospital. It trades about -0.06 of its total potential returns per unit of risk. Bangkok Chain Hospital is currently generating about -0.03 per unit of volatility. If you would invest  2,054  in Bangkok Chain Hospital on October 5, 2024 and sell it today you would lose (524.00) from holding Bangkok Chain Hospital or give up 25.51% of portfolio value over 90 days.

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

Heng Leasing Capital  vs.  Bangkok Chain Hospital

Heng Leasing Capital

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Heng Leasing Capital 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 forward-looking signals remain quite persistent which may send shares a bit higher in February 2025. The latest mess may also be a sign of long-standing up-swing for the company institutional investors.

Bangkok Chain Hospital

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Bangkok Chain Hospital 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 indicators remain quite persistent which may send shares a bit higher in February 2025. The latest mess may also be a sign of long-standing up-swing for the company institutional investors.

Pair Trading with Heng Leasing and Bangkok Chain

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

The idea behind Heng Leasing Capital and Bangkok Chain Hospital 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 Global Correlations module to find global opportunities by holding instruments from different markets.