Correlation Between Bumrungrad Hospital and Wattanapat Hospital

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

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

Diversification Opportunities for Bumrungrad Hospital and Wattanapat Hospital

-0.47

Correlation Coefficient

Bumrungrad Hospital  Wattanapat Hospital

Very good diversification

The 3 months correlation between Bumrungrad and Wattanapat is -0.47. Overlapping area represents the amount of risk that can be diversified away by holding Bumrungrad Hospital Public 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 Bumrungrad 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 Bumrungrad Hospital Public 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 Bumrungrad Hospital i.e., Bumrungrad Hospital and Wattanapat Hospital go up and down completely randomly.

Pair Corralation between Bumrungrad Hospital and Wattanapat Hospital

Assuming the 90 days horizon Bumrungrad Hospital Public is expected to generate 1.29 times more return on investment than Wattanapat Hospital. However, Bumrungrad Hospital is 1.29 times more volatile than Wattanapat Hospital Trang. It trades about 0.2 of its potential returns per unit of risk. Wattanapat Hospital Trang is currently generating about 0.13 per unit of risk. If you would invest  22,600  in Bumrungrad Hospital Public on January 30, 2024 and sell it today you would earn a total of  2,200  from holding Bumrungrad Hospital Public or generate 9.73% return on investment over 90 days.

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

Bumrungrad Hospital Public  vs.  Wattanapat Hospital Trang

Bumrungrad Hospital

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Bumrungrad Hospital Public are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. Despite quite persistent fundamental drivers, Bumrungrad Hospital is not utilizing all of its potentials. The latest stock price mess, may contribute to short-term losses for the institutional investors.

Wattanapat Hospital Trang

Risk-Adjusted Performance

16 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Wattanapat Hospital Trang are ranked lower than 16 (%) 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 Bumrungrad Hospital and Wattanapat Hospital

The main advantage of trading using opposite Bumrungrad Hospital and Wattanapat Hospital positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Bumrungrad Hospital 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 Bumrungrad Hospital Public 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 Instant Ratings module to determine any equity ratings based on digital recommendations. Macroaxis instant equity ratings are based on combination of fundamental analysis and risk-adjusted market performance.