Correlation Between Bangkok Expressway and China DatangRenewable

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

By analyzing existing cross correlation between Bangkok Expressway and and China Datang, you can compare the effects of market volatilities on Bangkok Expressway and China DatangRenewable 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 Bangkok Expressway with a short position of China DatangRenewable. Check out your portfolio center. Please also check ongoing floating volatility patterns of Bangkok Expressway and China DatangRenewable.

Diversification Opportunities for Bangkok Expressway and China DatangRenewable

-0.27

Correlation Coefficient

Bangkok Expressway  China DatangRenewable

Very good diversification

The 3 months correlation between Bangkok and China is -0.27. Overlapping area represents the amount of risk that can be diversified away by holding Bangkok Expressway and and China Datang in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on China DatangRenewable and Bangkok Expressway 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 Bangkok Expressway and are associated (or correlated) with China DatangRenewable. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of China DatangRenewable has no effect on the direction of Bangkok Expressway i.e., Bangkok Expressway and China DatangRenewable go up and down completely randomly.

Pair Corralation between Bangkok Expressway and China DatangRenewable

Assuming the 90 days horizon Bangkok Expressway and is expected to generate 34.03 times more return on investment than China DatangRenewable. However, Bangkok Expressway is 34.03 times more volatile than China Datang. It trades about 0.11 of its potential returns per unit of risk. China Datang is currently generating about 0.02 per unit of risk. If you would invest  18.00  in Bangkok Expressway and on January 11, 2025 and sell it today you would lose (6.00) from holding Bangkok Expressway and or give up 33.33% of portfolio value over 90 days.

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

Bangkok Expressway and  vs.  China Datang

Bangkok Expressway and

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Bangkok Expressway and are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, Bangkok Expressway reported solid returns over the last few months and may actually be approaching a breakup point.

China DatangRenewable

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in China Datang are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. Despite nearly stable basic indicators, China DatangRenewable is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with Bangkok Expressway and China DatangRenewable

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

The idea behind Bangkok Expressway and and China Datang 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 Positions Ratings module to determine portfolio positions ratings based on digital equity recommendations. Macroaxis instant position ratings are based on combination of fundamental analysis and risk-adjusted market performance.