Correlation Between Bank of Ayudhya and Earth Tech
Can any of the company-specific risk be diversified away by investing in both Bank of Ayudhya and Earth Tech 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 Earth Tech 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 Earth Tech Environment, you can compare the effects of market volatilities on Bank of Ayudhya and Earth Tech 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 Earth Tech. Check out your portfolio center. Please also check ongoing floating volatility patterns of Bank of Ayudhya and Earth Tech.
Diversification Opportunities for Bank of Ayudhya and Earth Tech
0.68 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Bank and Earth is 0.68. Overlapping area represents the amount of risk that can be diversified away by holding Bank of Ayudhya and Earth Tech Environment in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Earth Tech Environment 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 Earth Tech. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Earth Tech Environment has no effect on the direction of Bank of Ayudhya i.e., Bank of Ayudhya and Earth Tech go up and down completely randomly.
Pair Corralation between Bank of Ayudhya and Earth Tech
Assuming the 90 days trading horizon Bank of Ayudhya is expected to generate 0.24 times more return on investment than Earth Tech. However, Bank of Ayudhya is 4.23 times less risky than Earth Tech. It trades about 0.06 of its potential returns per unit of risk. Earth Tech Environment is currently generating about -0.14 per unit of risk. If you would invest 2,480 in Bank of Ayudhya on September 13, 2024 and sell it today you would earn a total of 20.00 from holding Bank of Ayudhya or generate 0.81% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 95.24% |
| Values | Daily Returns |
Bank of Ayudhya vs. Earth Tech Environment
Performance |
| Timeline |
| Bank of Ayudhya |
| Earth Tech Environment |
Bank of Ayudhya and Earth Tech Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Bank of Ayudhya and Earth Tech
The main advantage of trading using opposite Bank of Ayudhya and Earth Tech positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Bank of Ayudhya position performs unexpectedly, Earth Tech 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 Earth Tech will offset losses from the drop in Earth Tech'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 |
| Earth Tech vs. BCPG Public | Earth Tech vs. Energy Absolute Public | Earth Tech vs. Gunkul Engineering Public | Earth Tech vs. Gulf Energy Development |
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 Financial Widgets module to easily integrated Macroaxis content with over 30 different plug-and-play financial widgets.
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