Correlation Between Ratchaphruek Hospital and Eternal Energy

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

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

Diversification Opportunities for Ratchaphruek Hospital and Eternal Energy

0.6

Correlation Coefficient

Ratchaphruek Hospital  Eternal Energy

Poor diversification

The 3 months correlation between Ratchaphruek and Eternal is 0.6. Overlapping area represents the amount of risk that can be diversified away by holding Ratchaphruek Hospital Public and Eternal Energy Public in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Eternal Energy Public and Ratchaphruek 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 Ratchaphruek Hospital Public are associated (or correlated) with Eternal Energy. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Eternal Energy Public has no effect on the direction of Ratchaphruek Hospital i.e., Ratchaphruek Hospital and Eternal Energy go up and down completely randomly.

Pair Corralation between Ratchaphruek Hospital and Eternal Energy

Assuming the 90 days trading horizon Ratchaphruek Hospital Public is expected to generate 0.17 times more return on investment than Eternal Energy. However, Ratchaphruek Hospital Public is 5.88 times less risky than Eternal Energy. It trades about -0.02 of its potential returns per unit of risk. Eternal Energy Public is currently generating about -0.05 per unit of risk. If you would invest  540.00  in Ratchaphruek Hospital Public on December 24, 2024 and sell it today you would lose (5.00) from holding Ratchaphruek Hospital Public or give up 0.93% of portfolio value over 90 days.

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

Ratchaphruek Hospital Public  vs.  Eternal Energy Public

Ratchaphruek Hospital

Risk-Adjusted Performance

Very Weak

Over the last 90 days Ratchaphruek Hospital Public has generated negative risk-adjusted returns adding no value to investors with long positions. Despite quite persistent technical indicators, Ratchaphruek Hospital is not utilizing all of its potentials. The latest stock price mess, may contribute to short-term losses for the institutional investors.

Eternal Energy Public

Risk-Adjusted Performance

Very Weak

Over the last 90 days Eternal Energy Public has generated negative risk-adjusted returns adding no value to investors with long positions. Despite weak 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 Ratchaphruek Hospital and Eternal Energy

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

The idea behind Ratchaphruek Hospital Public and Eternal Energy 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 Stock Tickers module to use high-impact, comprehensive, and customizable stock tickers that can be easily integrated to any websites.