Correlation Between AP Public and Krung Thai
Can any of the company-specific risk be diversified away by investing in both AP Public 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 AP Public and Krung Thai into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between AP Public and Krung Thai Bank, you can compare the effects of market volatilities on AP Public 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 AP Public with a short position of Krung Thai. Check out your portfolio center. Please also check ongoing floating volatility patterns of AP Public and Krung Thai.
Diversification Opportunities for AP Public and Krung Thai
0.64 | Correlation Coefficient |
Poor diversification
The 3 months correlation between AP Public and Krung is 0.64. Overlapping area represents the amount of risk that can be diversified away by holding AP 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 AP Public 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 AP 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 AP Public i.e., AP Public and Krung Thai go up and down completely randomly.
Pair Corralation between AP Public and Krung Thai
Assuming the 90 days horizon AP Public is expected to under-perform the Krung Thai. In addition to that, AP Public is 1.91 times more volatile than Krung Thai Bank. It trades about -0.19 of its total potential returns per unit of risk. Krung Thai Bank is currently generating about -0.18 per unit of volatility. If you would invest 2,060 in Krung Thai Bank on September 4, 2024 and sell it today you would lose (60.00) from holding Krung Thai Bank or give up 2.91% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 95.45% |
| Values | Daily Returns |
AP Public vs. Krung Thai Bank
Performance |
| Timeline |
| AP Public |
| Krung Thai Bank |
AP Public and Krung Thai Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with AP Public and Krung Thai
The main advantage of trading using opposite AP Public and Krung Thai positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if AP Public 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.The idea behind AP Public and Krung Thai Bank 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.| Krung Thai vs. Thai Steel Cable | Krung Thai vs. Tropical Canning Public | Krung Thai vs. RB Food Supply | Krung Thai vs. Eureka Design 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 Portfolio Backtesting module to avoid under-diversification and over-optimization by backtesting your portfolios.
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