Correlation Between MFC Industrial and Bumrungrad Hospital

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

By analyzing existing cross correlation between MFC Industrial Investment and Bumrungrad Hospital PCL, you can compare the effects of market volatilities on MFC Industrial and Bumrungrad Hospital 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 MFC Industrial with a short position of Bumrungrad Hospital. Check out your portfolio center. Please also check ongoing floating volatility patterns of MFC Industrial and Bumrungrad Hospital.

Diversification Opportunities for MFC Industrial and Bumrungrad Hospital

0.56

Correlation Coefficient

MFC Industrial  Bumrungrad Hospital

Very weak diversification

The 3 months correlation between MFC and Bumrungrad is 0.56. Overlapping area represents the amount of risk that can be diversified away by holding MFC Industrial Investment and Bumrungrad Hospital PCL in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Bumrungrad Hospital PCL and MFC Industrial 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 MFC Industrial Investment are associated (or correlated) with Bumrungrad Hospital. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Bumrungrad Hospital PCL has no effect on the direction of MFC Industrial i.e., MFC Industrial and Bumrungrad Hospital go up and down completely randomly.

Pair Corralation between MFC Industrial and Bumrungrad Hospital

Assuming the 90 days trading horizon MFC Industrial Investment is expected to under-perform the Bumrungrad Hospital. In addition to that, MFC Industrial is 6.31 times more volatile than Bumrungrad Hospital PCL. It trades about -0.14 of its total potential returns per unit of risk. Bumrungrad Hospital PCL is currently generating about -0.11 per unit of volatility. If you would invest  19,618  in Bumrungrad Hospital PCL on December 30, 2024 and sell it today you would lose (2,868) from holding Bumrungrad Hospital PCL or give up 14.62% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	98.41%
Values	Daily Returns

MFC Industrial Investment  vs.  Bumrungrad Hospital PCL

MFC Industrial Investment

Risk-Adjusted Performance

Very Weak

Over the last 90 days MFC Industrial Investment 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 forward-looking signals remain quite persistent which may send shares a bit higher in April 2025. The latest mess may also be a sign of long-standing up-swing for the company institutional investors.

Bumrungrad Hospital PCL

Risk-Adjusted Performance

Very Weak

Over the last 90 days Bumrungrad Hospital PCL 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 drivers remain quite persistent which may send shares a bit higher in April 2025. The latest mess may also be a sign of long-standing up-swing for the company institutional investors.

Pair Trading with MFC Industrial and Bumrungrad Hospital

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

The idea behind MFC Industrial Investment and Bumrungrad Hospital PCL 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 ETF Categories module to list of ETF categories grouped based on various criteria, such as the investment strategy or type of investments.