Correlation Between Bangkok Expressway and East Japan

Can any of the company-specific risk be diversified away by investing in both Bangkok Expressway and East Japan 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 East Japan 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 East Japan Railway, you can compare the effects of market volatilities on Bangkok Expressway and East Japan 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 East Japan. Check out your portfolio center. Please also check ongoing floating volatility patterns of Bangkok Expressway and East Japan.

Diversification Opportunities for Bangkok Expressway and East Japan

0.0

Correlation Coefficient

Bangkok Expressway  East Japan

Pay attention - limited upside

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

Pair Corralation between Bangkok Expressway and East Japan

Assuming the 90 days horizon Bangkok Expressway is expected to generate 43.01 times less return on investment than East Japan. But when comparing it to its historical volatility, Bangkok Expressway And is 14.71 times less risky than East Japan. It trades about 0.06 of its potential returns per unit of risk. East Japan Railway is currently generating about 0.17 of returns per unit of risk over similar time horizon. If you would invest  1,604  in East Japan Railway on January 24, 2024 and sell it today you would earn a total of  174.00  from holding East Japan Railway or generate 10.85% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Flat
Strength	Insignificant
Accuracy	71.39%
Values	Daily Returns

Bangkok Expressway And  vs.  East Japan Railway

Bangkok Expressway And

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Bangkok Expressway And has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable basic indicators, Bangkok Expressway is not utilizing all of its potentials. The newest stock price disturbance, may contribute to mid-run losses for the stockholders.

East Japan Railway

Risk-Adjusted Performance

16 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in East Japan Railway are ranked lower than 16 (%) of all global equities and portfolios over the last 90 days. Despite nearly weak basic indicators, East Japan reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Bangkok Expressway and East Japan

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

The idea behind Bangkok Expressway And and East Japan Railway 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 Economic Indicators module to top statistical indicators that provide insights into how an economy is performing.