Correlation Between Mahachai Hospital and Bangkok Chain

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

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

Diversification Opportunities for Mahachai Hospital and Bangkok Chain

0.66

Correlation Coefficient

Mahachai Hospital  Bangkok Chain

Poor diversification

The 3 months correlation between Mahachai and Bangkok is 0.66. Overlapping area represents the amount of risk that can be diversified away by holding Mahachai Hospital Public 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 Mahachai Hospital 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 Mahachai Hospital Public 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 Mahachai Hospital i.e., Mahachai Hospital and Bangkok Chain go up and down completely randomly.

Pair Corralation between Mahachai Hospital and Bangkok Chain

Assuming the 90 days trading horizon Mahachai Hospital Public is expected to under-perform the Bangkok Chain. But the stock apears to be less risky and, when comparing its historical volatility, Mahachai Hospital Public is 74.84 times less risky than Bangkok Chain. The stock trades about -0.05 of its potential returns per unit of risk. The Bangkok Chain Hospital is currently generating about 0.11 of returns per unit of risk over similar time horizon. If you would invest  1,640  in Bangkok Chain Hospital on September 4, 2024 and sell it today you would earn a total of  40.00  from holding Bangkok Chain Hospital or generate 2.44% return on investment over 90 days.

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

Mahachai Hospital Public  vs.  Bangkok Chain Hospital

Mahachai Hospital Public

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Mahachai Hospital Public has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong fundamental indicators, Mahachai Hospital is not utilizing all of its potentials. The latest stock price disturbance, may contribute to short-term losses for the investors.

Bangkok Chain Hospital

Risk-Adjusted Performance

8 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Bangkok Chain Hospital are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. Despite somewhat conflicting fundamental drivers, Bangkok Chain sustained solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Mahachai Hospital and Bangkok Chain

The main advantage of trading using opposite Mahachai Hospital and Bangkok Chain positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Mahachai Hospital 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 Mahachai Hospital Public 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 Portfolio File Import module to quickly import all of your third-party portfolios from your local drive in csv format.