Correlation Between BCPG Public and Khon Kaen
Can any of the company-specific risk be diversified away by investing in both BCPG Public and Khon Kaen 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 BCPG Public and Khon Kaen into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between BCPG Public and Khon Kaen Sugar, you can compare the effects of market volatilities on BCPG Public and Khon Kaen 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 BCPG Public with a short position of Khon Kaen. Check out your portfolio center. Please also check ongoing floating volatility patterns of BCPG Public and Khon Kaen.
Diversification Opportunities for BCPG Public and Khon Kaen
0.39 | Correlation Coefficient |
Weak diversification
The 3 months correlation between BCPG and Khon is 0.39. Overlapping area represents the amount of risk that can be diversified away by holding BCPG Public and Khon Kaen Sugar in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Khon Kaen Sugar and BCPG 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 BCPG Public are associated (or correlated) with Khon Kaen. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Khon Kaen Sugar has no effect on the direction of BCPG Public i.e., BCPG Public and Khon Kaen go up and down completely randomly.
Pair Corralation between BCPG Public and Khon Kaen
Assuming the 90 days trading horizon BCPG Public is expected to under-perform the Khon Kaen. But the stock apears to be less risky and, when comparing its historical volatility, BCPG Public is 37.15 times less risky than Khon Kaen. The stock trades about -0.02 of its potential returns per unit of risk. The Khon Kaen Sugar is currently generating about 0.08 of returns per unit of risk over similar time horizon. If you would invest 208.00 in Khon Kaen Sugar on September 3, 2024 and sell it today you would lose (12.00) from holding Khon Kaen Sugar or give up 5.77% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
BCPG Public vs. Khon Kaen Sugar
Performance |
| Timeline |
| BCPG Public |
| Khon Kaen Sugar |
BCPG Public and Khon Kaen Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with BCPG Public and Khon Kaen
The main advantage of trading using opposite BCPG Public and Khon Kaen positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if BCPG Public position performs unexpectedly, Khon Kaen 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 Khon Kaen will offset losses from the drop in Khon Kaen's long position.| BCPG Public vs. Bangchak Public | BCPG Public vs. Gulf Energy Development | BCPG Public vs. Bangkok Expressway and | BCPG Public vs. BGrimm Power 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 Volatility module to check portfolio volatility and analyze historical return density to properly model market risk.
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