Correlation Between Bank of Ayudhya and Tata Steel
Can any of the company-specific risk be diversified away by investing in both Bank of Ayudhya and Tata Steel 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 Tata Steel 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 Tata Steel Public, you can compare the effects of market volatilities on Bank of Ayudhya and Tata Steel 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 Tata Steel. Check out your portfolio center. Please also check ongoing floating volatility patterns of Bank of Ayudhya and Tata Steel.
Diversification Opportunities for Bank of Ayudhya and Tata Steel
0.21 | Correlation Coefficient |
Modest diversification
The 3 months correlation between Bank and Tata is 0.21. Overlapping area represents the amount of risk that can be diversified away by holding Bank of Ayudhya and Tata Steel Public in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Tata Steel 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 Tata Steel. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Tata Steel Public has no effect on the direction of Bank of Ayudhya i.e., Bank of Ayudhya and Tata Steel go up and down completely randomly.
Pair Corralation between Bank of Ayudhya and Tata Steel
Assuming the 90 days trading horizon Bank of Ayudhya is expected to generate 27.38 times less return on investment than Tata Steel. But when comparing it to its historical volatility, Bank of Ayudhya is 2.28 times less risky than Tata Steel. It trades about 0.0 of its potential returns per unit of risk. Tata Steel Public is currently generating about 0.04 of returns per unit of risk over similar time horizon. If you would invest 70.00 in Tata Steel Public on August 31, 2024 and sell it today you would earn a total of 1.00 from holding Tata Steel Public or generate 1.43% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Bank of Ayudhya vs. Tata Steel Public
Performance |
| Timeline |
| Bank of Ayudhya |
| Tata Steel Public |
Bank of Ayudhya and Tata Steel Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Bank of Ayudhya and Tata Steel
The main advantage of trading using opposite Bank of Ayudhya and Tata Steel positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Bank of Ayudhya position performs unexpectedly, Tata Steel 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 Tata Steel will offset losses from the drop in Tata Steel's long position.| Bank of Ayudhya vs. TISCO Financial Group | Bank of Ayudhya vs. SCB X Public | Bank of Ayudhya vs. Bangkok Bank 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 Portfolio Suggestion module to get suggestions outside of your existing asset allocation including your own model portfolios.
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