Correlation Between Mahachai Hospital and STPI Public

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

Diversification Opportunities for Mahachai Hospital and STPI Public

0.92

Correlation Coefficient

Mahachai Hospital  STPI Public

Almost no diversification

The 3 months correlation between Mahachai and STPI is 0.92. Overlapping area represents the amount of risk that can be diversified away by holding Mahachai Hospital Public and STPI Public in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on STPI 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 STPI Public. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of STPI Public has no effect on the direction of Mahachai Hospital i.e., Mahachai Hospital and STPI Public go up and down completely randomly.

Pair Corralation between Mahachai Hospital and STPI Public

Assuming the 90 days trading horizon Mahachai Hospital is expected to generate 1.01 times less return on investment than STPI Public. In addition to that, Mahachai Hospital is 1.0 times more volatile than STPI Public. It trades about 0.13 of its total potential returns per unit of risk. STPI Public is currently generating about 0.13 per unit of volatility. If you would invest  0.00  in STPI Public on September 3, 2024 and sell it today you would earn a total of  344.00  from holding STPI Public or generate 9.223372036854776E16% return on investment over 90 days.

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

Mahachai Hospital Public  vs.  STPI Public

Mahachai Hospital Public

Risk-Adjusted Performance

9 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Mahachai Hospital Public are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. Despite somewhat conflicting fundamental indicators, Mahachai Hospital sustained solid returns over the last few months and may actually be approaching a breakup point.

STPI Public

Risk-Adjusted Performance

9 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in STPI Public are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. Despite quite conflicting forward-looking signals, STPI Public disclosed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Mahachai Hospital and STPI Public

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

The idea behind Mahachai Hospital Public and STPI 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 Portfolio Backtesting module to avoid under-diversification and over-optimization by backtesting your portfolios.