Correlation Between Life Healthcare and Bangkok Dusit

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

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

Diversification Opportunities for Life Healthcare and Bangkok Dusit

-0.84

Correlation Coefficient

Life Healthcare  Bangkok Dusit

Pay attention - limited upside

The 3 months correlation between Life and Bangkok is -0.84. Overlapping area represents the amount of risk that can be diversified away by holding Life Healthcare Group 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 Life Healthcare 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 Life Healthcare Group 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 Life Healthcare i.e., Life Healthcare and Bangkok Dusit go up and down completely randomly.

Pair Corralation between Life Healthcare and Bangkok Dusit

If you would invest  313.00  in Life Healthcare Group on August 31, 2024 and sell it today you would earn a total of  52.00  from holding Life Healthcare Group or generate 16.61% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Significant
Accuracy	9.38%
Values	Daily Returns

Life Healthcare Group  vs.  Bangkok Dusit Medical

Life Healthcare Group

Risk-Adjusted Performance

8 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Life Healthcare Group are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. In spite of fairly fragile technical indicators, Life Healthcare showed solid returns over the last few months and may actually be approaching a breakup point.

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. Despite nearly stable essential indicators, Bangkok Dusit is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with Life Healthcare and Bangkok Dusit

The main advantage of trading using opposite Life Healthcare and Bangkok Dusit positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Life Healthcare 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 Life Healthcare Group 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.

Check out your portfolio center.

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 Pattern Recognition module to use different Pattern Recognition models to time the market across multiple global exchanges.