Correlation Between Mahachai Hospital and Wattana Karnpaet

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

Diversification Opportunities for Mahachai Hospital and Wattana Karnpaet

0.06

Correlation Coefficient

Mahachai Hospital  Wattana Karnpaet

Significant diversification

The 3 months correlation between Mahachai and Wattana is 0.06. Overlapping area represents the amount of risk that can be diversified away by holding Mahachai Hospital Public 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 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 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 Mahachai Hospital i.e., Mahachai Hospital and Wattana Karnpaet go up and down completely randomly.

Pair Corralation between Mahachai Hospital and Wattana Karnpaet

Assuming the 90 days trading horizon Mahachai Hospital Public is expected to under-perform the Wattana Karnpaet. But the stock apears to be less risky and, when comparing its historical volatility, Mahachai Hospital Public is 3.49 times less risky than Wattana Karnpaet. The stock trades about -0.14 of its potential returns per unit of risk. The Wattana Karnpaet Public is currently generating about 0.06 of returns per unit of risk over similar time horizon. If you would invest  6,225  in Wattana Karnpaet Public on September 13, 2024 and sell it today you would earn a total of  775.00  from holding Wattana Karnpaet Public or generate 12.45% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	98.36%
Values	Daily Returns

Mahachai Hospital Public  vs.  Wattana Karnpaet Public

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 conflicting performance in the last few months, the Stock's fundamental indicators remain somewhat strong which may send shares a bit higher in January 2025. The current disturbance may also be a sign of long term up-swing for the company 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 Mahachai Hospital and Wattana Karnpaet

The main advantage of trading using opposite Mahachai Hospital and Wattana Karnpaet positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Mahachai Hospital 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 Mahachai Hospital Public 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 Positions Ratings module to determine portfolio positions ratings based on digital equity recommendations. Macroaxis instant position ratings are based on combination of fundamental analysis and risk-adjusted market performance.