Correlation Between Asset World and Bangkok Commercial

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

By analyzing existing cross correlation between Asset World Corp and Bangkok Commercial Property, you can compare the effects of market volatilities on Asset World and Bangkok Commercial 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 Asset World with a short position of Bangkok Commercial. Check out your portfolio center. Please also check ongoing floating volatility patterns of Asset World and Bangkok Commercial.

Diversification Opportunities for Asset World and Bangkok Commercial

-0.37

Correlation Coefficient

Asset World  Bangkok Commercial

Very good diversification

The 3 months correlation between Asset and Bangkok is -0.37. Overlapping area represents the amount of risk that can be diversified away by holding Asset World Corp and Bangkok Commercial Property in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Bangkok Commercial and Asset World 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 Asset World Corp are associated (or correlated) with Bangkok Commercial. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Bangkok Commercial has no effect on the direction of Asset World i.e., Asset World and Bangkok Commercial go up and down completely randomly.

Pair Corralation between Asset World and Bangkok Commercial

Assuming the 90 days trading horizon Asset World Corp is expected to generate 2.37 times more return on investment than Bangkok Commercial. However, Asset World is 2.37 times more volatile than Bangkok Commercial Property. It trades about 0.09 of its potential returns per unit of risk. Bangkok Commercial Property is currently generating about 0.09 per unit of risk. If you would invest  418.00  in Asset World Corp on February 4, 2024 and sell it today you would earn a total of  16.00  from holding Asset World Corp or generate 3.83% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	94.44%
Values	Daily Returns

Asset World Corp  vs.  Bangkok Commercial Property

Asset World Corp

Risk-Adjusted Performance

5 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Asset World Corp are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. Despite quite conflicting fundamental indicators, Asset World may actually be approaching a critical reversion point that can send shares even higher in June 2024.

Bangkok Commercial

Risk-Adjusted Performance

0 of 100

Very Weak

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

Pair Trading with Asset World and Bangkok Commercial

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

The idea behind Asset World Corp and Bangkok Commercial Property 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 Portfolio Comparator module to compare the composition, asset allocations and performance of any two portfolios in your account.