Correlation Between Mahachai Hospital and Thai Life

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

Diversification Opportunities for Mahachai Hospital and Thai Life

0.16

Correlation Coefficient

Mahachai Hospital  Thai Life

Average diversification

The 3 months correlation between Mahachai and Thai is 0.16. Overlapping area represents the amount of risk that can be diversified away by holding Mahachai Hospital Public and Thai Life Insurance in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Thai Life Insurance 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 Thai Life. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Thai Life Insurance has no effect on the direction of Mahachai Hospital i.e., Mahachai Hospital and Thai Life go up and down completely randomly.

Pair Corralation between Mahachai Hospital and Thai Life

Assuming the 90 days trading horizon Mahachai Hospital Public is expected to under-perform the Thai Life. But the stock apears to be less risky and, when comparing its historical volatility, Mahachai Hospital Public is 1.45 times less risky than Thai Life. The stock trades about -0.47 of its potential returns per unit of risk. The Thai Life Insurance is currently generating about -0.01 of returns per unit of risk over similar time horizon. If you would invest  1,130  in Thai Life Insurance on October 4, 2024 and sell it today you would lose (10.00) from holding Thai Life Insurance or give up 0.88% of portfolio value over 90 days.

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

Mahachai Hospital Public  vs.  Thai Life Insurance

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 February 2025. The current disturbance may also be a sign of long term up-swing for the company investors.

Thai Life Insurance

Risk-Adjusted Performance

6 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Thai Life Insurance are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. Despite quite conflicting forward indicators, Thai Life may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Pair Trading with Mahachai Hospital and Thai Life

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

The idea behind Mahachai Hospital Public and Thai Life Insurance 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 USA ETFs module to find actively traded Exchange Traded Funds (ETF) in USA.