Correlation Between Bank of Ayudhya and SAF Special
Can any of the company-specific risk be diversified away by investing in both Bank of Ayudhya and SAF Special 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 SAF Special 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 SAF Special Steel, you can compare the effects of market volatilities on Bank of Ayudhya and SAF Special 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 SAF Special. Check out your portfolio center. Please also check ongoing floating volatility patterns of Bank of Ayudhya and SAF Special.
Diversification Opportunities for Bank of Ayudhya and SAF Special
0.64 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Bank and SAF is 0.64. Overlapping area represents the amount of risk that can be diversified away by holding Bank of Ayudhya and SAF Special Steel in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SAF Special Steel 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 SAF Special. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of SAF Special Steel has no effect on the direction of Bank of Ayudhya i.e., Bank of Ayudhya and SAF Special go up and down completely randomly.
Pair Corralation between Bank of Ayudhya and SAF Special
Assuming the 90 days trading horizon Bank of Ayudhya is expected to generate 6.6 times less return on investment than SAF Special. But when comparing it to its historical volatility, Bank of Ayudhya is 2.86 times less risky than SAF Special. It trades about 0.02 of its potential returns per unit of risk. SAF Special Steel is currently generating about 0.05 of returns per unit of risk over similar time horizon. If you would invest 47.00 in SAF Special Steel on August 29, 2024 and sell it today you would earn a total of 4.00 from holding SAF Special Steel or generate 8.51% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Bank of Ayudhya vs. SAF Special Steel
Performance |
| Timeline |
| Bank of Ayudhya |
| SAF Special Steel |
Bank of Ayudhya and SAF Special Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Bank of Ayudhya and SAF Special
The main advantage of trading using opposite Bank of Ayudhya and SAF Special positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Bank of Ayudhya position performs unexpectedly, SAF Special 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 SAF Special will offset losses from the drop in SAF Special's long position.| Bank of Ayudhya vs. Karmarts Public | Bank of Ayudhya vs. Kang Yong Electric | Bank of Ayudhya vs. Kiatnakin Phatra Bank | Bank of Ayudhya vs. SCG PACKAGING PCL NVDR |
| SAF Special vs. MCS Steel Public | SAF Special vs. Hwa Fong Rubber | SAF Special vs. Haad Thip Public | SAF Special vs. SCG PACKAGING PCL NVDR |
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 Odds Of Bankruptcy module to get analysis of equity chance of financial distress in the next 2 years.
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