Correlation Between Bank of Ayudhya and 2S Metal
Can any of the company-specific risk be diversified away by investing in both Bank of Ayudhya and 2S Metal 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 Bank of Ayudhya and 2S Metal into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Bank of Ayudhya and 2S Metal Public, you can compare the effects of market volatilities on Bank of Ayudhya and 2S Metal 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 Bank of Ayudhya with a short position of 2S Metal. Check out your portfolio center. Please also check ongoing floating volatility patterns of Bank of Ayudhya and 2S Metal.
Diversification Opportunities for Bank of Ayudhya and 2S Metal
0.19 | Correlation Coefficient |
Average diversification
The 3 months correlation between Bank and 2S Metal is 0.19. Overlapping area represents the amount of risk that can be diversified away by holding Bank of Ayudhya and 2S Metal Public in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on 2S Metal Public and Bank of Ayudhya 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 Bank of Ayudhya are associated (or correlated) with 2S Metal. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of 2S Metal Public has no effect on the direction of Bank of Ayudhya i.e., Bank of Ayudhya and 2S Metal go up and down completely randomly.
Pair Corralation between Bank of Ayudhya and 2S Metal
Assuming the 90 days trading horizon Bank of Ayudhya is expected to generate 0.48 times more return on investment than 2S Metal. However, Bank of Ayudhya is 2.07 times less risky than 2S Metal. It trades about 0.07 of its potential returns per unit of risk. 2S Metal Public is currently generating about -0.24 per unit of risk. If you would invest 2,500 in Bank of Ayudhya on August 24, 2024 and sell it today you would earn a total of 25.00 from holding Bank of Ayudhya or generate 1.0% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 95.45% |
| Values | Daily Returns |
Bank of Ayudhya vs. 2S Metal Public
Performance |
| Timeline |
| Bank of Ayudhya |
| 2S Metal Public |
Bank of Ayudhya and 2S Metal Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Bank of Ayudhya and 2S Metal
The main advantage of trading using opposite Bank of Ayudhya and 2S Metal positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Bank of Ayudhya position performs unexpectedly, 2S Metal 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 2S Metal will offset losses from the drop in 2S Metal's long position.| Bank of Ayudhya vs. Bangkok Bank Public | Bank of Ayudhya vs. Krung Thai Bank | Bank of Ayudhya vs. SCB X Public | Bank of Ayudhya vs. Kasikornbank Public |
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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 Sectors module to list of equity sectors categorizing publicly traded companies based on their primary business activities.
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