Correlation Between Ratchaphruek Hospital and GMM Grammy

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

Diversification Opportunities for Ratchaphruek Hospital and GMM Grammy

0.31

Correlation Coefficient

Ratchaphruek Hospital  GMM Grammy

Weak diversification

The 3 months correlation between Ratchaphruek and GMM is 0.31. Overlapping area represents the amount of risk that can be diversified away by holding Ratchaphruek Hospital Public and GMM Grammy Public in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on GMM Grammy 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 GMM Grammy. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of GMM Grammy Public has no effect on the direction of Ratchaphruek Hospital i.e., Ratchaphruek Hospital and GMM Grammy go up and down completely randomly.

Pair Corralation between Ratchaphruek Hospital and GMM Grammy

Assuming the 90 days trading horizon Ratchaphruek Hospital Public is expected to under-perform the GMM Grammy. But the stock apears to be less risky and, when comparing its historical volatility, Ratchaphruek Hospital Public is 1.65 times less risky than GMM Grammy. The stock trades about -0.09 of its potential returns per unit of risk. The GMM Grammy Public is currently generating about -0.01 of returns per unit of risk over similar time horizon. If you would invest  810.00  in GMM Grammy Public on October 24, 2024 and sell it today you would lose (10.00) from holding GMM Grammy Public or give up 1.23% of portfolio value over 90 days.

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

Ratchaphruek Hospital Public  vs.  GMM Grammy Public

Ratchaphruek Hospital

Risk-Adjusted Performance

0 of 100

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.

GMM Grammy Public

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days GMM Grammy Public has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong basic indicators, GMM Grammy is not utilizing all of its potentials. The latest stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Ratchaphruek Hospital and GMM Grammy

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

The idea behind Ratchaphruek Hospital Public and GMM Grammy 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 Idea Breakdown module to analyze constituents of all Macroaxis ideas. Macroaxis investment ideas are predefined, sector-focused investing themes.