Correlation Between Thonburi Medical and Ladprao General

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

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

Diversification Opportunities for Thonburi Medical and Ladprao General

-0.26

Correlation Coefficient

Thonburi Medical  Ladprao General

Very good diversification

The 3 months correlation between Thonburi and Ladprao is -0.26. Overlapping area represents the amount of risk that can be diversified away by holding Thonburi Medical Centre and Ladprao General Hospital in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Ladprao General Hospital and Thonburi 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 Thonburi Medical Centre are associated (or correlated) with Ladprao General. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Ladprao General Hospital has no effect on the direction of Thonburi Medical i.e., Thonburi Medical and Ladprao General go up and down completely randomly.

Pair Corralation between Thonburi Medical and Ladprao General

Assuming the 90 days trading horizon Thonburi Medical Centre is expected to generate 1.26 times more return on investment than Ladprao General. However, Thonburi Medical is 1.26 times more volatile than Ladprao General Hospital. It trades about 0.04 of its potential returns per unit of risk. Ladprao General Hospital is currently generating about -0.11 per unit of risk. If you would invest  9,250  in Thonburi Medical Centre on September 13, 2024 and sell it today you would earn a total of  200.00  from holding Thonburi Medical Centre or generate 2.16% return on investment over 90 days.

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

Thonburi Medical Centre  vs.  Ladprao General Hospital

Thonburi Medical Centre

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Thonburi Medical Centre are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. Despite quite persistent technical indicators, Thonburi Medical is not utilizing all of its potentials. The latest stock price mess, may contribute to short-term losses for the institutional investors.

Ladprao General Hospital

Risk-Adjusted Performance

0 of 100

Very Weak

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

Pair Trading with Thonburi Medical and Ladprao General

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

The idea behind Thonburi Medical Centre and Ladprao General 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 Transaction History module to view history of all your transactions and understand their impact on performance.