Correlation Between Thonburi Medical and Wattana Karnpaet

Can any of the company-specific risk be diversified away by investing in both Thonburi Medical and Wattana Karnpaet 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 Wattana Karnpaet 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 Wattana Karnpaet Public, you can compare the effects of market volatilities on Thonburi Medical and Wattana Karnpaet 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 Wattana Karnpaet. Check out your portfolio center. Please also check ongoing floating volatility patterns of Thonburi Medical and Wattana Karnpaet.

Diversification Opportunities for Thonburi Medical and Wattana Karnpaet

0.05

Correlation Coefficient

Thonburi Medical  Wattana Karnpaet

Significant diversification

The 3 months correlation between Thonburi and Wattana is 0.05. Overlapping area represents the amount of risk that can be diversified away by holding Thonburi Medical Centre and Wattana Karnpaet Public in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Wattana Karnpaet Public 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 Wattana Karnpaet. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Wattana Karnpaet Public has no effect on the direction of Thonburi Medical i.e., Thonburi Medical and Wattana Karnpaet go up and down completely randomly.

Pair Corralation between Thonburi Medical and Wattana Karnpaet

Assuming the 90 days trading horizon Thonburi Medical Centre is expected to generate 15.22 times more return on investment than Wattana Karnpaet. However, Thonburi Medical is 15.22 times more volatile than Wattana Karnpaet Public. It trades about 0.08 of its potential returns per unit of risk. Wattana Karnpaet Public is currently generating about -0.04 per unit of risk. If you would invest  9,400  in Thonburi Medical Centre on September 13, 2024 and sell it today you would earn a total of  50.00  from holding Thonburi Medical Centre or generate 0.53% return on investment over 90 days.

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

Thonburi Medical Centre  vs.  Wattana Karnpaet Public

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.

Wattana Karnpaet Public

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Wattana Karnpaet Public are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. Despite quite conflicting basic indicators, Wattana Karnpaet disclosed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Thonburi Medical and Wattana Karnpaet

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

The idea behind Thonburi Medical Centre and Wattana Karnpaet Public 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 CEOs Directory module to screen CEOs from public companies around the world.