Correlation Between Quality Houses and Bangchak Public

Can any of the company-specific risk be diversified away by investing in both Quality Houses and Bangchak 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 Quality Houses and Bangchak Public into the same portfolio, which is an essential part of the fundamental portfolio management process.

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

Diversification Opportunities for Quality Houses and Bangchak Public

-0.13

Correlation Coefficient

Quality Houses  Bangchak Public

Good diversification

The 3 months correlation between Quality and Bangchak is -0.13. Overlapping area represents the amount of risk that can be diversified away by holding Quality Houses Hotel and Bangchak Public in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Bangchak Public and Quality Houses 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 Quality Houses Hotel are associated (or correlated) with Bangchak Public. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Bangchak Public has no effect on the direction of Quality Houses i.e., Quality Houses and Bangchak Public go up and down completely randomly.

Pair Corralation between Quality Houses and Bangchak Public

Assuming the 90 days trading horizon Quality Houses Hotel is expected to generate 55.11 times more return on investment than Bangchak Public. However, Quality Houses is 55.11 times more volatile than Bangchak Public. It trades about 0.11 of its potential returns per unit of risk. Bangchak Public is currently generating about -0.1 per unit of risk. If you would invest  0.00  in Quality Houses Hotel on September 3, 2024 and sell it today you would earn a total of  0.00  from holding Quality Houses Hotel or generate 0.0% return on investment over 90 days.

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

Quality Houses Hotel  vs.  Bangchak Public

Quality Houses Hotel

Risk-Adjusted Performance

8 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Quality Houses Hotel are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. Despite quite conflicting forward-looking signals, Quality Houses disclosed solid returns over the last few months and may actually be approaching a breakup point.

Bangchak Public

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Bangchak 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 basic indicators remain quite persistent which may send shares a bit higher in January 2025. The latest mess may also be a sign of long-standing up-swing for the company institutional investors.

Pair Trading with Quality Houses and Bangchak Public

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

The idea behind Quality Houses Hotel and Bangchak 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.

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 Cryptocurrency Center module to build and monitor diversified portfolio of extremely risky digital assets and cryptocurrency.