Correlation Between 2S Metal and Krung Thai
Can any of the company-specific risk be diversified away by investing in both 2S Metal and Krung Thai 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 2S Metal and Krung Thai into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between 2S Metal Public and Krung Thai Bank, you can compare the effects of market volatilities on 2S Metal and Krung Thai 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 2S Metal with a short position of Krung Thai. Check out your portfolio center. Please also check ongoing floating volatility patterns of 2S Metal and Krung Thai.
Diversification Opportunities for 2S Metal and Krung Thai
0.48 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between 2S Metal and Krung is 0.48. Overlapping area represents the amount of risk that can be diversified away by holding 2S Metal Public and Krung Thai Bank in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Krung Thai Bank and 2S Metal 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 2S Metal Public are associated (or correlated) with Krung Thai. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Krung Thai Bank has no effect on the direction of 2S Metal i.e., 2S Metal and Krung Thai go up and down completely randomly.
Pair Corralation between 2S Metal and Krung Thai
Assuming the 90 days horizon 2S Metal Public is expected to under-perform the Krung Thai. In addition to that, 2S Metal is 2.15 times more volatile than Krung Thai Bank. It trades about -0.17 of its total potential returns per unit of risk. Krung Thai Bank is currently generating about -0.13 per unit of volatility. If you would invest 2,090 in Krung Thai Bank on August 27, 2024 and sell it today you would lose (40.00) from holding Krung Thai Bank or give up 1.91% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
2S Metal Public vs. Krung Thai Bank
Performance |
| Timeline |
| 2S Metal Public |
| Krung Thai Bank |
2S Metal and Krung Thai Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with 2S Metal and Krung Thai
The main advantage of trading using opposite 2S Metal and Krung Thai positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if 2S Metal position performs unexpectedly, Krung Thai 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 Krung Thai will offset losses from the drop in Krung Thai's long position.| 2S Metal vs. Tata Steel Public | 2S Metal vs. G J Steel | 2S Metal vs. TMT Steel Public | 2S Metal vs. MCS Steel Public |
| Krung Thai vs. Supalai Public | Krung Thai vs. Thai Oil Public | Krung Thai vs. The Erawan Group | Krung Thai vs. Ditto Public |
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.
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