Correlation Between Temecula Valley and Bangkok Dusit

Can any of the company-specific risk be diversified away by investing in both Temecula Valley and Bangkok Dusit 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 Temecula Valley and Bangkok Dusit into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Temecula Valley Bancorp and Bangkok Dusit Medical, you can compare the effects of market volatilities on Temecula Valley and Bangkok Dusit 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 Temecula Valley with a short position of Bangkok Dusit. Check out your portfolio center. Please also check ongoing floating volatility patterns of Temecula Valley and Bangkok Dusit.

Diversification Opportunities for Temecula Valley and Bangkok Dusit

0.0

Correlation Coefficient

Temecula Valley  Bangkok Dusit

Pay attention - limited upside

The 3 months correlation between Temecula and Bangkok is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding Temecula Valley Bancorp and Bangkok Dusit Medical in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Bangkok Dusit Medical and Temecula Valley 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 Temecula Valley Bancorp are associated (or correlated) with Bangkok Dusit. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Bangkok Dusit Medical has no effect on the direction of Temecula Valley i.e., Temecula Valley and Bangkok Dusit go up and down completely randomly.

Pair Corralation between Temecula Valley and Bangkok Dusit

If you would invest  3,186  in Bangkok Dusit Medical on December 29, 2024 and sell it today you would earn a total of  47.00  from holding Bangkok Dusit Medical or generate 1.48% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Flat
Strength	Insignificant
Accuracy	0.0%
Values	Daily Returns

Temecula Valley Bancorp  vs.  Bangkok Dusit Medical

Temecula Valley Bancorp

Risk-Adjusted Performance

Very Weak

Over the last 90 days Temecula Valley Bancorp has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly stable fundamental indicators, Temecula Valley is not utilizing all of its potentials. The latest stock price fuss, may contribute to near-short-term losses for the sophisticated investors.

Bangkok Dusit Medical

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Bangkok Dusit Medical are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. In spite of fairly strong basic indicators, Bangkok Dusit is not utilizing all of its potentials. The recent stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Temecula Valley and Bangkok Dusit

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

The idea behind Temecula Valley Bancorp and Bangkok Dusit Medical 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 Risk-Return Analysis module to view associations between returns expected from investment and the risk you assume.