Correlation Between Carnival and Wattanapat Hospital

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

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

Diversification Opportunities for Carnival and Wattanapat Hospital

-0.14

Correlation Coefficient

Carnival  Wattanapat Hospital

Good diversification

The 3 months correlation between Carnival and Wattanapat is -0.14. Overlapping area represents the amount of risk that can be diversified away by holding Carnival and Wattanapat Hospital Trang in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Wattanapat Hospital Trang and Carnival 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 Carnival are associated (or correlated) with Wattanapat Hospital. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Wattanapat Hospital Trang has no effect on the direction of Carnival i.e., Carnival and Wattanapat Hospital go up and down completely randomly.

Pair Corralation between Carnival and Wattanapat Hospital

Considering the 90-day investment horizon Carnival is expected to under-perform the Wattanapat Hospital. In addition to that, Carnival is 1.31 times more volatile than Wattanapat Hospital Trang. It trades about -0.24 of its total potential returns per unit of risk. Wattanapat Hospital Trang is currently generating about 0.01 per unit of volatility. If you would invest  835.00  in Wattanapat Hospital Trang on January 26, 2024 and sell it today you would earn a total of  0.00  from holding Wattanapat Hospital Trang or generate 0.0% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	85.71%
Values	Daily Returns

Carnival  vs.  Wattanapat Hospital Trang

Carnival

Risk-Adjusted Performance

0 of 100

Very Weak

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

Wattanapat Hospital Trang

Risk-Adjusted Performance

14 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Wattanapat Hospital Trang are ranked lower than 14 (%) of all global equities and portfolios over the last 90 days. Despite quite conflicting technical indicators, Wattanapat Hospital disclosed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Carnival and Wattanapat Hospital

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

The idea behind Carnival and Wattanapat Hospital Trang 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 Price Transformation module to use Price Transformation models to analyze the depth of different equity instruments across global markets.