Correlation Between Walker Dunlop and Thai Airways

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

By analyzing existing cross correlation between Walker Dunlop and Thai Airways International, you can compare the effects of market volatilities on Walker Dunlop and Thai Airways 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 Walker Dunlop with a short position of Thai Airways. Check out your portfolio center. Please also check ongoing floating volatility patterns of Walker Dunlop and Thai Airways.

Diversification Opportunities for Walker Dunlop and Thai Airways

-0.08

Correlation Coefficient

Walker Dunlop  Thai Airways

Good diversification

The 3 months correlation between Walker and Thai is -0.08. Overlapping area represents the amount of risk that can be diversified away by holding Walker Dunlop and Thai Airways International in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Thai Airways Interna and Walker Dunlop 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 Walker Dunlop are associated (or correlated) with Thai Airways. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Thai Airways Interna has no effect on the direction of Walker Dunlop i.e., Walker Dunlop and Thai Airways go up and down completely randomly.

Pair Corralation between Walker Dunlop and Thai Airways

Allowing for the 90-day total investment horizon Walker Dunlop is expected to generate 22.43 times less return on investment than Thai Airways. But when comparing it to its historical volatility, Walker Dunlop is 13.67 times less risky than Thai Airways. It trades about 0.08 of its potential returns per unit of risk. Thai Airways International is currently generating about 0.12 of returns per unit of risk over similar time horizon. If you would invest  0.64  in Thai Airways International on January 20, 2024 and sell it today you would earn a total of  0.26  from holding Thai Airways International or generate 40.62% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	99.6%
Values	Daily Returns

Walker Dunlop  vs.  Thai Airways International

Walker Dunlop

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Walker Dunlop has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest fragile performance, the Stock's fundamental indicators remain sound and the latest tumult on Wall Street may also be a sign of longer-term gains for the firm shareholders.

Thai Airways Interna

Risk-Adjusted Performance

8 of 100

OK

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

Pair Trading with Walker Dunlop and Thai Airways

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

The idea behind Walker Dunlop and Thai Airways International 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 Correlation Analysis module to reduce portfolio risk simply by holding instruments which are not perfectly correlated.